Visas
	 — 
	Question

Lord Ahmed: To ask Her Majesty's Government what assessment they have made of their visa services for Pakistani students and visitors in Abu Dhabi.

Lord West of Spithead: Lords, there have been delays in the visa operation in Pakistan, particularly in issuing visas resulting from successful appeal decisions. Some applicants have been inconvenienced as a result. The United Kingdom has a close and important relationship with Pakistan. During the Home Secretary's recent visit to Pakistan, he assured the Government there that the visa operation is a priority and committed to reducing processing times to meet the published service standards by November.

Lord Ahmed: My Lords, I thank my noble friend for his reply, but can he tell the House how many Pakistani students have missed their university deadlines and lost their student fees and scholarships due to the backlog and delays in Abu Dhabi? How many people are waiting for visa endorsements in Islamabad after winning their appeals in British courts in the past six months? Will Her Majesty's Government refund fees of all those victims of our failure who have missed their deadlines for medical check-ups, university courses, family weddings and professional jobs, either due to the backlog or the delay in FedEx? And finally—

Noble Lords: Too long!

Lord West of Spithead: My Lords, I thank my noble friend for his question. I do not have at my fingertips the exact numbers of those who have missed courses; I shall get back to him in writing. We have about 10,000 students currently studying in the United Kingdom. In the first nine months of this year, just under 8,000 student visas were issued. On the appeals, the team working in Abu Dhabi, which is fully set up now, cleared more than 4,000 cases in five weeks in September and October and we will continue at that pace. We are rapidly getting up to speed.

Baroness Falkner of Margravine: My Lords, will the Minister confirm that the delays in processing are caused by the multi-agency checks being carried out by the security service and others? If security is the consideration, why was the visa centre moved to Abu Dhabi rather than to a safer location, such as Karachi? If security is the motivation, why have only 29 face-to-face interviews been conducted out of 66,000 applications in the nine-month period to June 2009?

Lord West of Spithead: My Lords, there are a number of questions in there. As interviews, we have discovered, interestingly, that interviews are not a reliable indicator necessarily; people make them out to be more effective than they are. The independent monitor and others have pointed out that research into job selection methods shows the interview as the weakest link. We go into great detail with the electronic checks and paper-based decision-making. As for the move to Abu Dhabi, there is no doubt that there have been problems caused by IT failures and linkages, so it has not worked straightaway as well as we would have liked. However, we have resolved most of those problems and things are working much better. On refusal rates, we refuse automatically any bid that includes false documentation or information. In Pakistan, there is a very high volume of false documentation. As soon as we spot it, the whole bid is refused. That is one of the problems.

Baroness Neville-Jones: My Lords, it is very welcome that the Government have taken the sensible decision to return the visa process to Pakistan itself. That is something that we on these Benches have called for. Can the Minister confirm whether the IT system is now fully operational? He referred to what I hope are just teething problems. How many staff are now employed there and of what type? Are they locally engaged or home-based? How many will there be when the office is up and running, if it is not fully operational now?

Lord West of Spithead: My Lords, we have not returned the issuing of visas to Pakistan; that is done in Abu Dhabi. It is part of the hub and spoke process that we have around the world. I apologise because I did not fully answer the last question. Yes, there is an issue of safety; there is no doubt about that. This happened post the Marriott hotel attack in Pakistan, where we were concerned about the large number of people we had there. We assessed Karachi as a dangerous place as well in that sense and Abu Dhabi was seen as a much better place for this. Abu Dhabi also acts as a spoke for Bahrain and will shortly do the same for Iran. The other reason is to get a certain standard for this type of work around the world, and that is working quite well.
	As to the number of people, we currently have 15 UK-based staff in Islamabad, 15 Ralon staff and 120 locally engaged staff, who do the detailed nitty-gritty stuff. In Abu Dhabi, we have 146 staff, of whom 88 are support staff and the others are primarily British. I visited that unit because we were having problems there. It had difficulties initially, but it is rapidly getting up to speed and we are clearing the backlog.

Lord Tomlinson: My Lords, is my noble friend aware that, when the Home Office was consulting on visa fees for overseas students, the Association of Independent Higher Education Providers—I declare an interest as its chairman—said that the level of fee was less important than the quality of service? The quality of service to our would-be students from overseas is of fundamental importance to the economic interest of this country and now that the new points-based system is coming into effect, everything must be done to make sure that students get their visas as expeditiously as is needed for them to take up their courses.

Lord West of Spithead: My Lords, I could not agree more with my noble friend. I declare an interest as chancellor of a university. Foreign students are important, not only in economic terms—if they come from outside the EU they are a valuable economic tool—but because we are able to add huge value to their training in terms of what they can do when they go back to their nations, and they add huge value to our students in terms of the interchange of ideas. This is an important matter.
	We are aware that there has been a delay. As I already said, we are working extremely hard to get this right and we are getting there. We have cleared a big backlog; we are getting better and quicker and we will resolve this problem. Working with Pakistan is extremely important to us. The safeguards that we have put in place are crucial. We had to tighten up our borders and over the past two years or so we have done an immense amount in this area.

Lord Ahmed: This is my second chance, my Lords. What is the legal status of those Pakistanis who apply for a visa in Islamabad and it is endorsed on their passports as having been issued in Abu Dhabi, when they have never been to Abu Dhabi?

Lord West of Spithead: My Lords, I take notice of my noble friend's question; I am not sure of the exact answer. As I understand it, once the visa has been issued it allows freedom of movement in exactly the same way as with an ordinary passport. If I am wrong, I will get back to him in writing.

Road Tax
	 — 
	Question

Baroness Knight of Collingtree: To ask Her Majesty's Government why the Driver and Vehicle Licensing Agency has altered its practice in respect of road tax charged on vehicles registered in other European countries.

Lord Faulkner of Worcester: My Lords, the policy has not changed. Since 2006, we have pursued an education and enforcement campaign aimed at foreign-registered vehicles in the UK. This arose from public concern over the perceived increase in foreign-registered vehicles that were not subject to UK road-tax rules. Vehicles may be used by visitors for up to six months in 12 without having to meet UK requirements. The campaign continues and we believe that public concern has lessened.

Baroness Knight of Collingtree: My Lords, was it not the 1982 EU ruling that cars registered and taxed in one European country could travel freely in any other European country for up to six months, continuously or otherwise? Was that not drafted to permit easy travel throughout Europe? Why has the DVLA deleted the words "continuously or otherwise"? Cars are being impounded without any warning and their drivers forced to pay £420 to get them back. Is that fair?

Lord Faulkner of Worcester: My Lords, the policy has been driven by public concern over the very large number of foreign vehicles that are coming on to our roads, particularly since the enlargement of the European Union and the influx of workers from countries such as Poland and Lithuania. When a foreign car is first spotted by either the police or the general public it is arranged for a warning notice to be placed on that vehicle saying that the driver is required to register it if they are here for six months within a year. Only after the six months have elapsed, or the vehicle is spotted again, is enforcement action taken.

Lord Anderson of Swansea: My Lords, my noble friend will know that I am always ready to defend my home city and my former constituents at the DVLA. Is it not true that the case which received publicity recently did not involve the DVLA in any way? The police in good faith, but wrongly, clamped a motor vehicle, and they put it right as soon as they could, without payment. Will he also confirm that, largely as a result of the publicity campaign to which he refers, concern over the number of foreign vehicles not paying our road tax has largely been allayed?

Lord Faulkner of Worcester: Yes, my Lords, my noble friend is correct—it has been a successful campaign. Obviously there will be the odd case when somebody is hard done by, and he has referred to one case which has received publicity. It was indeed based in Northamptonshire, the home county of the noble Baroness, where the police have been particularly active with their own Operation Andover campaign. The number of vehicles that have enforcement action taken against them has reduced and the situation appears now to be under control.

Lord Bradshaw: My Lords, on the subject of enforcement action against foreign vehicles and foreign-registered vehicles—because there are many British people registering their cars abroad—will the Minister please ensure, first, that the drivers of these vehicles are able to read the road signs in this country? There is a lot of evidence of people being totally ignorant of signs that say no left turn or no right turn, or that give bridge heights, although these are supposed to be international signs. Will the Minister also comment on the level of fines being imposed by VOSA on foreign vehicles which are improperly maintained and driven by drivers who have exceeded the driver's hours? These fines are derisory in respect of the amount of damage to fair competition.

Lord Faulkner of Worcester: With great respect to the noble Lord, both his questions are rather wide of the original Question. The second question is about road freight vehicles, about which he and I had a lengthy exchange in your Lordships' Chamber two weeks ago last Friday. Road signs are a matter that falls well wide of the original Question.

Baroness Gardner of Parkes: My Lords, is the Minister aware that there is great concern about vehicles that carry foreign plates that are unreadable in this country? People feel that such drivers are getting away with everything because the police cannot read the Arabic or Chinese or whatever it is and, therefore, that the drivers get no penalties of any sort and there is no enforcement. I have raised this before. Has the department looked at it again?

Lord Faulkner of Worcester: It is precisely that situation which the scheme aims to catch. Once a foreign vehicle with either a recognisable or unrecognisable number plate is spotted, the warning notice is placed on it and the owner or driver knows what he or she is required to do in terms of getting the car taxed and registered in the UK. The problem of unreadable number plates is not however confined to foreign plates. There are a number of plates called cherished plates, which British drivers have, which also fall foul of the law. Action is also being taken about them.

Baroness Hanham: My Lords, are differential tax rates operated in European countries on the basis of car emissions, as they are in this country?

Lord Faulkner of Worcester: I hate to give the same answer to the noble Baroness as I gave to the noble Lord, Lord Bradshaw, but that question, too, is a long way short of the Question on the Order Paper, which concerns the registration of foreign vehicles. However, I am happy to answer the noble Baroness in writing.

Viscount Montgomery of Alamein: My Lords, would some of the rather ancient vehicles that arrive in this country be eligible for the scrappage fund?

Lord Faulkner of Worcester: The noble Viscount is correct: once a foreign vehicle comes within the scope of the DVLA and our tax and registration system, it is required to comply with MoT tests and all the other roadworthiness requirements. It is interesting to note that in the last 12 months in which the scheme has been in operation, 18,419 vehicles registered overseas have been sighted, 691 have been clamped, 387 have been impounded, and 132 vehicles registered overseas—which I think are the vehicles he is asking about—have been authorised for disposal, mainly by what I am advised is called shredding.

Lord Roberts of Llandudno: My Lords, in what language is the notice that is put on the windscreens of these vehicles?

Lord Faulkner of Worcester: The notices are not in Welsh because Welsh vehicles are not subject to this regime. In the early days of the scheme, notices in Polish and Lithuanian were put on cars, but as the European Union expanded further that was felt to be unnecessary and it has been replaced with a programme of education aimed at those local communities to ensure that their nationals are aware of the rules.

Internet: Broadband
	 — 
	Question

Baroness Byford: To ask Her Majesty's Government what progress is being made towards delivering broadband to rural communities.

Lord Davies of Oldham: My Lords, the Digital Britain White Paper outlined the Government's universal service commitment for broadband at a speed of 2 megabits per second to virtually every community in the UK by 2012. The paper also outlined plans for a next generation fund, to help to deliver next generation broadband to at least 90 per cent of homes and businesses by 2017. The Network Design and Procurement Company will be responsible for the delivery on behalf of the Government.

Baroness Byford: My Lords, while thanking the Minister for that response, I understand that Ofgem does not have powers to compel internet service providers to provide broadband in rural areas, which has resulted in some 166,000 people having no internet at all and more than 2 million having inadequate service provision. How will the broadband be delivered in these circumstances, particularly with regard to the proposed new megabyte speeds of 24, 40 and 100? Will this not be more focused on urban areas, leaving rural areas out in the cold?

Lord Davies of Oldham: My Lords, Ofgem cannot command to be done what cannot be done technically. The noble Baroness is right to identify that a percentage of our households cannot receive the requisite signal. We are addressing that. Under the universal service commitment, which we have been following since the summer, we are committed to ensuring that all households have access to the basic service of 2 megabits per second. The second, longer-term project concerning vastly improved speeds, to which the noble Baroness referred, depends partly on market conditions and provision by private companies, but the Government are also taking steps to ensure that we universalise that service in due course as far as we are able to do so.

Lord St John of Bletso: My Lords, does the Minister agree that, with more and more people in rural communities working from home and the increasing trend to media-rich content, the requirement for broadband speeds is more in the region of 50 to 100 megabits per second? What assurances can the Government give that rural communities will move to these speeds in the future?

Lord Davies of Oldham: My Lords, that is exactly the objective of the next generation access. It is clear that we will not be serving our communities, nor will we be remaining competitive with other countries, if we do not guarantee that next generation broadband is more universally available than it is at present. Certainly, there is provision of broadband at present from, for instance, Virgin, while BT is also interested in spreading its reach in these terms. However, the Government are concerned about that reach and I am grateful to the noble Lord for emphasising how important it is.

The Lord Bishop of Exeter: My Lords, the problem of lack of access to broadband is compounded for those rural communities that have poor analogue TV, no digital TV and often, at best, limited mobile phone connectivity. Do the Government have any plans to provide suitable grant aid to enable local rural communities to develop their own broadband, where it is clearly not commercially viable to provide that through the telecoms company? If there are no plans, will they consider that as part of implementing Digital Britain?

Lord Davies of Oldham: My Lords, far from there being no plans, there is a major government commitment to meeting the exact objective that the right reverend Prelate has indicated. We are going to use funds from the digital switchover—£175 million—to guarantee that we reach those areas that have not got digital television at present; the development of broadband goes along with that. The Government have identified the funds that will be made available. We have not the slightest doubt that that is merely objective No. 1. The right reverend Prelate will recognise that we are spreading digital television across the whole of the UK in the next four years.

Lord Harris of Haringey: My Lords, can we be assured that, given the extraordinary extent to which city dwellers already subsidise those who live in rural communities, this will not be another example where urban dwellers will be taxed, or have to pay more, so as to subsidise the often very pleasant lifestyles of those who live in rural communities?

Lord Davies of Oldham: My Lords, that may be regarded as a somewhat provocative question in some quarters. I merely emphasise to my noble friend that we are intending to guarantee that these services are available across the whole country, because they are essential to our future economic and social success. That is why there will be a tax on telephone users of 50p per month for a line—we are not talking about an excessive amount—to subsidise and help to spread the opportunities across the whole country, in circumstances where we could not possibly have parts of our communities having no access at all to these services.

Lord Greaves: My Lords, I am tempted to invite the noble Lord, Lord Harris, to come with me to visit some of my upland sheep farmer friends, who do not exactly have a luxurious lifestyle. Back in July, Defra announced that money from the European economic recovery plan, which rural development agencies would use as part of the rural development programme, would help to fill some of the holes in broadband provision, not least for my upland sheep farmer friends and for people in places like that. What is the mechanism by which this money will be used and what will it be used for?

Lord Davies of Oldham: My Lords, we are of course grateful for resources from wherever they emerge, but the noble Lord will be all too well aware that £2.5 million from Europe is a flea bite in relation to the total issues to be addressed. While it is welcome and is directed towards particular areas, the context of this question is universal access. That is a massive project and we have given clear indications since the summer of how we intend to tackle it. It can be fulfilled only by a long-term commitment to the objectives that I have identified.

Lord De Mauley: My Lords—

Lord Hunt of Kings Heath: My Lords, if noble Lords asked shorter questions and gave shorter responses, we would have time for more questions. We are in the 24th minute.

Burma
	 — 
	Question

Baroness Cox: To ask Her Majesty's Government what is their response to recent developments in Burma.

Baroness Kinnock of Holyhead: My Lords, we remain deeply concerned at the appalling human rights abuses and the lack of a credible transition to democracy in Burma. Over 2,100 political prisoners remain behind bars, and the country's ethnic nationalities suffer oppression and discrimination. Aung San Suu Kyi's meetings with our ambassador on 9 October, and with the United States Assistant Secretary of State last week, are a small but welcome development. We will continue to press for real progress and genuine dialogue between the Government, the Opposition and ethnic nationalities in Burma.

Baroness Cox: My Lords, in thanking the noble Baroness for that sympathetic reply, I ask whether she is aware that, on a recent visit to the Shan, Karen and Kareni peoples of eastern Burma, we found that they still continue to suffer from sustained military offences by government troops? Their shoot-to-kill policy has driven tens of thousands more civilians into hiding in the jungle where they have to live in harrowing conditions of danger and deprivation. Might Her Majesty's Government consider increasing some cross-border aid to help these people to survive in those conditions, especially with the imminent onset of the rainy season?

Baroness Kinnock of Holyhead: I thank the noble Baroness, and of course am aware that offences against the Karen, the Shan, the Kareni and the Kokang in recent months are of grave concern. DfID is increasing its support for groups channelling cross-border humanitarian aid into Burma. This year about £360,000 of DfID funding is being used by NGOs for cross-border aid delivered to eastern Burma from Thailand, so it is happening. About £500,000 is being provided for healthcare in Shan and Kachin states across the border from China. Proposals are under consideration to increase funding on both borders in 2010. We will continue to review the level of support and the targeting of these programmes and I am sure we will rely on the noble Baroness to keep us on our toes.

Baroness Rawlings: My Lords—

Lord Archer of Sandwell: My Lords—

Lord Hunt of Kings Heath: My Lords, self-regulation does rely on noble Lords being prepared to give way. Could we hear the noble Baroness first, and then perhaps my noble and learned friend?

Baroness Rawlings: Thank you very much. With Burma on the External Relations Council agenda on 17 November, what is Her Majesty's Government's position towards continuing sanctions?

Baroness Kinnock of Holyhead: Her Majesty's Government's position is to ensure that we see progress in Burma. We need to see all political prisoners released and the democratic opposition and ethnic nationalities being able to participate in deliberations and dialogue, otherwise any future movement towards election would lack credibility and validity. Therefore we have no wish to remove sanctions until such time as we see that kind of progress taking place. When and if we do, we will do it.

Lord Archer of Sandwell: My Lords, while commending the work which the Government have done already, given the mass murders, tortures, rapes, human minesweepers and mass evictions in the Karen and Shan provinces, would my noble friend agree that if that did not evoke the responsibility to protect, it would be difficult to imagine a situation which would? If it were happening in the West, there would by now be at least an arms embargo. Will the Government initiate discussions at the UN Security Council with a view to getting some action on this?

Baroness Kinnock of Holyhead: The noble and learned Lord rightly describes the horrific situation that we see in the ethnic-nationality areas in Burma. The Prime Minister—we should commend him for this—wrote in August to the UN Secretary-General Ban Ki-Moon and his fellow UN Security Council members, calling for that exact global arms embargo against Burma. We believe that no one should be selling arms to a Burmese military regime which continues to have such an appalling human rights record. The EU, the US and others have had a comprehensive arms embargo in place for many years, but the time now has come for all countries to end the sale of arms to Burma.

Lord Dykes: My Lords, I return to the Minister's Answer. Will the Minister now undertake to have direct talks between the British Government and the American Secretary of State, not just the Assistant Secretary of State, about the US's disappointing and timid policy and very hesitant tactics towards this quite odious and obnoxious regime? Is it not time now that real dialogue with the opposition party took place, not just a pretence?

Baroness Kinnock of Holyhead: The noble Lord raises an important point. There is a misconception that the position of the United States has weakened. We agree with the US that, in the absence of progress, sanctions need to be kept in place. Our shared objectives remain the release of political prisoners and dialogue between the Government, opposition and ethnic groups. We need to see a genuine transition to democracy and if the NLD, the opposition party which Aung San Suu Kyi leads, is calling for dialogue—which it is—we would welcome that, but on its terms, not those of the military junta that is in control.

Baroness Symons of Vernham Dean: My Lords, I pay tribute to the noble Baroness, Lady Cox, for her extraordinary work on this issue, which she has carried out in this House for as long as I can remember. I regret to say that when I first answered questions on this issue 13 years ago, I had to give appallingly similar answers to those that my noble friend is giving. Can she shed light on this? Is there any realistic sign of a change in policy among the Burmese Government?

Baroness Kinnock of Holyhead: I fear that I see very little signal or likelihood of a change of policy to the extent that would satisfy those of us who believe in supporting and working towards the democratic standards, values and principles which we would adhere to in this Chamber. It is extremely important that we make that case clear, that we maintain sanctions against this regime, and that we maintain our strong and forceful dialogue with it. Our Prime Minister continuously raises the issue of the freedom of Aung San Suu Kyi. If she could obtain her freedom and the opportunity to work with her NLD party colleagues, that would be real progress. I, too, very much respect the work of the noble Baroness, Lady Cox.

Arrangement of Business
	 — 
	Announcement

Lord Bassam of Brighton: My Lords, after consideration of Commons amendments to the Health Bill, my noble friend the Deputy Leader of the House will repeat a Statement on energy national policy statements. This is a new and novel procedure.

Privileges Committee
	 — 
	Membership Motion

Moved By The Chairman of Committees
	To move that Lord Scott of Foscote be appointed a member of the Select Committee in place of Baroness Prashar, resigned.
	Motion agreed.

Health Bill [HL]

Main Bill Page
	Copy of the Bill
	Explanatory Notes
	Commons Amendments

Commons Amendments

Motion to Commit to Committee of the Whole House
	 Moved by Baroness Thornton
	That the Commons Amendments 1 to 10, together with any amendments relating thereto, be considered in a Committee of the Whole House.

Lord Naseby: I seek clarification from the noble Baroness. An unusual procedure is being followed. I am not entirely clear what happens to these amendments after they have gone into Committee and at what point they link up with the Bill which, I understand, we were hoping dispose of this evening.

Baroness Thornton: We will go into Committee to discuss a new matter. The usual channels have agreed to that procedure. Then any amendments to the Commons amendments will be put before the House and decided on, and then the Commons amendments, as amended or not, will be put and decided on. The House will then revert back to the discussion of Commons amendments.
	Motion agreed.
	House in Committee.
	Motion on Amendment 1
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendment 1.
	1: Insert the following new Clause-
	"De-authorisation of NHS foundation trusts
	(1) In the National Health Service Act 2006 after section 52 insert-
	Application of sections to
	(1) Sections to apply to-
	(a) an NHS foundation trust authorised under section 35 on an application under section 33;
	(b) an NHS foundation trust established under section 56 to which subsection applies.
	(2) This subsection applies to an NHS foundation trust if-
	(a) at least one of the trusts on whose application the NHS foundation trust was established was an NHS foundation trust within subsection , or was an NHS trust all or most of whose hospitals, establishments and facilities were in England, or
	(b) the NHS foundation trust is the result of a succession of mergers under section 56, any of which involved an NHS foundation trust within subsection or an NHS trust all or most of whose hospitals, establishments and facilities were in England.
	52B De-authorisation: regulator's notice
	(1) The regulator may give the Secretary of State a notice under this section if it is satisfied that-
	(a) an NHS foundation trust to which this section applies is contravening or failing to comply with, or has contravened or failed to comply with, any term of its authorisation or any requirement imposed on it under any enactment, and
	(b) the seriousness of the contravention or failure, or, if there has been more than one, of any of them taken together, is such that it would justify the Secretary of State making an order under section .
	(2) The notice must be in writing.
	(3) With the notice the regulator must give the Secretary of State a report stating the reasons why it is satisfied as mentioned in subsection .
	(4) Before giving a notice under this section, the regulator must consult first the Secretary of State (unless the notice follows a request by the Secretary of State under section ) and then-
	(a) the trust,
	(b) any Strategic Health Authority in whose area the trust has hospitals, establishments or facilities, and
	(c) any other person to which the trust provides goods or services under this Act and which the regulator considers it appropriate to consult.
	52C Grounds for de-authorisation notice
	(1) In determining under section whether the making of an order would be justified, and in determining whether to give a notice under that section, the regulator must consider these matters (among others)-
	(a) the health and safety of patients;
	(b) the quality of the provision by the trust of goods and services;
	(c) the financial position of the trust;
	(d) the way it is being run.
	(2) The regulator must publish guidance as to the matters (including those mentioned in subsection ) that it proposes to consider in making those determinations.
	(3) Before publishing any guidance under this section, including any revised guidance, the regulator must consult-
	(a) the Secretary of State,
	(b) each NHS foundation trust to which this section applies,
	(c) each NHS trust intending to make an application to become an NHS foundation trust, and
	(d) such other persons as the regulator considers appropriate.
	52D De-authorisation
	(1) If the regulator gives notice under section in relation to a trust, the Secretary of State must make an order for it to cease to be an NHS foundation trust.
	(2) An order made under subsection must specify the date when it is to take effect, which must be within the period of 5 working days beginning with the day on which it is made.
	(3) On an order under subsection taking effect in relation to a body, it ceases to be an NHS foundation trust and a public benefit corporation and becomes a National Health Service trust.
	(4) The order must specify, in relation to the trust, the matters mentioned in paragraph 5(1)(a) to (c) of Schedule 4 and, where the trust has a significant teaching commitment, the matters mentioned in paragraph 5(1)(d).
	(5) The order may provide for any provision under subsection specifying the number of executive directors and non-executive directors to take effect at the end of a period specified in the order.
	(6) Schedule 8A makes further provision about trusts in respect of which an order is made under subsection .
	(7) If it appears to the Secretary of State to be necessary in order to comply with provision made under subsection , or made by regulations under paragraph 4 of Schedule 4, the Secretary of State may by order-
	(a) terminate the office of any executive or non-executive director of the trust;
	(b) appoint a person to be an executive or non-executive director of the trust.
	(8) Within seven days after the day on which the Secretary of State makes an order under subsection the regulator must publish its report under section .
	(9) In this section "working day" means any day which is not Saturday, Sunday, Christmas Day, Good Friday or a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.
	52E Secretary of State's request
	(1) If it appears to the Secretary of State that there are grounds for the regulator to be satisfied as mentioned in section , the Secretary of State may request the regulator in writing to consider exercising its power to give a notice under that section.
	(2) A request under this section must-
	(a) specify the NHS foundation trust to which it relates, and
	(b) state the grounds relied on by the Secretary of State.
	(3) The Secretary of State must lay before Parliament any request under this section.
	(4) If within the required period the regulator does not give a notice under section in response to a request under this section, it must, within that period, publish its reasons for not doing so with a statement as to how it has complied with section.
	(5) The required period is-
	(a) 14 days beginning with the day after the regulator receives the request, or
	(b) any longer period specified in the request.
	(6) The Secretary of State may by order extend or further extend the required period."
	(2) Schedule 2 (which inserts Schedule 8A to the National Health Service Act 2006, which makes provision about de-authorised NHS foundation trusts) has effect."

Baroness Thornton: My Lords, these amendments address a fundamental omission in the foundation trust regulatory regime. The omission recently came to light following the events at Mid-Staffordshire NHS Foundation Trust. The amendments were introduced to the Bill on Report in another place. Given this late introduction I am pleased that the debate on these amendments will take place under Committee rules, allowing your Lordships' House the chance to debate them.
	NHS foundation trusts are a key part of the Government's health reform programme and are proving to be a success. The autonomy afforded to a foundation trust offers the best model for improving the provision of healthcare, allowing greater freedoms and autonomy to those who can demonstrate high performance. However, the events at Mid-Staffordshire Foundation Trust demonstrated clear failings to its patients, the public and the NHS. The Government are committed to learning the lessons of these events to ensure such events cannot happen again.
	My honourable friend the Minister of State for Health, on introducing these amendments in another place, said that they acted on two of the many lessons we have to learn. First, Monitor, the independent regulator of foundation trusts, should have the power to remove foundation trust status where a foundation trust fails to live up to the high standards. Secondly, transparent democratic accountability is vital when a foundation trusts fails.
	The amendments need to be viewed in the context of the existing powers of intervention. The National Health Service Act 2006 provides the independent regulator, Monitor, with a range of powers of intervention in foundation trusts. These can be used in the event of a significant breach of the terms of authorisation or requirements in legislation. Monitor's powers include the removal of any or all of the directors of the board or requiring the board of a foundation trust to do, or not do, specific things.
	As noble Lords will be aware, the Bill also contains clauses relating to trust special administrators, which would enable Monitor to trigger deauthorisation of a foundation trust that is no longer sustainable in its current form. This is as a preliminary to the deauthorised trust coming under the control of a trust special administrator as part of a prescribed six-month process.
	The proposal presented for consideration today is the final missing option between those extremes. It would enable Monitor to trigger deauthorisation for a sustainable foundation trust. Foundation trusts are authorised on the basis of being high-performing organisations. It is logical that, should they fail to live up to the required standards and lose public confidence, powers should exist to remove their foundation trust status. A power to deauthorise provides a clear message that foundation trusts must maintain the high standards that are expected of them, and provides the public with the confidence that organisations must continue to earn the right to continue as foundation trusts.
	The new Section 52B provides that triggering deauthorisation will be a decision for Monitor. Under the proposals, when a foundation trust has breached any term of its authorisation, or requirements in legislation, and the breach is so serious that it justifies deauthorisation, Monitor may trigger deauthorisation. Triggering deauthorisation will be a complex decision. The new Section 52C establishes a framework requiring that Monitor considers four factors: the health and safety of patients; the quality of services that are provided; the financial position of the trust; and the way it is being run.
	To ensure transparency, new Section 52C also requires Monitor to consult on and publish guidance setting out the detail of the factors that it will take into account. Before triggering deauthorisation, Monitor must consult with key stakeholders to get their views. Accordingly, Monitor will be required to consult, as a minimum, the Secretary of State, the trust itself, the appropriate strategic health authority and relevant commissioners of the trust's services. This mirrors the clauses relating to trust special administrators.
	Having done this, if Monitor gives a deauthorisation notice, the Secretary of State must make an order deauthorising the foundation trust, which will take effect within five working days of the order being made. The new Section 52D provides that the deauthorised foundation trust would then become an NHS trust under Secretary of State powers of direction. In common with the clauses relating to trust special administrators, Schedule 2 to the Bill means transitional arrangements will be put in place to allow the continuation of commercial arrangements entered into using foundation trust freedoms and to ensure continuity of services for local people.
	Along with this new process, the amendments will also strengthen democratic accountability. While Monitor is responsible for the regulation of foundation trusts, the Secretary of State is ultimately accountable to Parliament for the overall provision of NHS services.
	Monitor's operational independence is a vital part of the regulatory framework, and one that we should seek to maintain. Only Monitor can trigger the deauthorisation of a foundation trust, reinforcing Monitor's independence, and ensuring that its authority is not undermined, but when considering the most serious risks to patients, the Secretary of State should be able to formally express his view.
	To enable this, the amendments propose that the Secretary of State should be able to formally request that Monitor consider deauthorising a foundation trust. In any such situation, it will be vital that the Secretary of State and Monitor are able to act quickly and transparently. We therefore propose that if Monitor believes that a differing course of action is preferable, it will be required to publicly explain its decision, either within a default of 14 days, or within such further time as the Secretary of State deems appropriate to the particulars of the case.
	Finally, I turn to Amendment 6. It corrects a minor drafting error in Clause 18(8)(b), which lists orders that are not subject to any statutory procedure. The other orders made in connection with trust special administrators are not subject to any statutory procedure and an order made under new Clause 65L(5) should also have been included in this list. This makes the drafting consistent with the Government's original intention, which was approved by the House of Lords Committee on Delegated Powers and Regulatory Reform.
	The Government believe in strong, independent regulation of foundation trusts, and that foundation trust status should continue to be earned. I hope that noble Lords will agree that these proposals give Monitor a useful further regulatory power, while formalising a method for the Secretary of State to have a transparent dialogue with Monitor concerning the most serious of foundation trust failures.
	I am glad that we will now have the opportunity for a full debate on this issue, and I beg to move.
	Amendment to the Motion
	 Moved by Earl Howe
	1A: Leave out lines 99 to 118

Earl Howe: My Lords, I beg to move Amendment 1A, as an amendment to Commons Amendment 1.
	It is perhaps understandable that the Government should have seized the opportunity afforded by the Bill to slot into it a raft of provisions by which they clearly set a lot of store, but it is nevertheless unfortunate that we should be considering these important matters for the first time only at the very last stage of the Bill's passage through the House. Nevertheless, we are where we are, and it is, I hope, helpful that we can debate the amendment under the rules of Committee, because it certainly begs a number of fundamental questions.
	The first question is: why is the amendment thought to be necessary? We are here dealing with the situation in which a foundation hospital such as Mid-Staffordshire NHS Trust is found to be delivering patient care to a seriously inferior standard—an unacceptable standard. We can no doubt conjure up all sorts of imaginary examples of how that might come about. Interestingly, we are not here talking about a foundation trust whose viability is under threat only because of financial failure. We already have provisions in the Bill to deal with that situation.
	The amendment deals with management failure and what should be done when patients are exposed, for example, to serious clinical risk or serious health and safety shortcomings sufficient to constitute a breach of trust authorisation. Ministers are saying that in such a situation, Monitor should have the option of deciding that the trust should be deauthorised—in other words, that it should lose its foundation status and move back into the jurisdiction of the Secretary of State.
	What might be the point of that? The only point that would resonate with me is the likely benefit to patients, but where is the evidence that bringing a hospital back under the aegis of a strategic health authority would be more likely to solve its management difficulties than if it were kept under the regulatory eye of Monitor? All the evidence points in the other direction. Take the example of Maidstone and Tunbridge Wells. The fact that Maidstone and Tunbridge Wells was in the direct line of sight of the Secretary of State made no difference to the catastrophe that occurred there. The very serious management problems that emerged in Mid-Staffordshire Hospital were ones that began long before it achieved foundation status. They were there when it was still an NHS trust under the direct scrutiny of the strategic health authority and, by extension, the Secretary of State.
	By contrast, it is a matter of common agreement that Monitor has an extraordinarily successful record as a regulator. It has extensive powers of intervention, as the Minister mentioned. It has used those powers on a number of occasions to great effect. Where trusts have breached the standards set out in their terms of authorisation, Monitor has, in every case, taken action that has brought them back into compliance. Sometimes, this kind of action need only be informal, but if we look at the provisions contained in Section 52 of the 2006 Act, we are rapidly reminded that there is no shortage of weapons at Monitor's disposal, should it chose to deploy them. I find it difficult to imagine a situation where to resolve a failure of management, it would be thought better to move a trust out of Monitor's jurisdiction and into that of Ministers. Therefore, my first question to the Minister is about the evidence that has led the Government to believe that there really is a regulatory gap here. The gap identified by Dr David Colin-Thomé was much more about better co-ordination and communication between the various regulators than it was about deficiencies in legislation.
	My next question relates to some of the wording in the amendment. New Section 52B covers the conditions governing the serving of a notice by the regulator. To paraphrase this section, it says that the regulator may give the Secretary of State a notice if it is satisfied that a foundation trust is contravening any term of its authorisation or any of its legal obligations and that the breach, whatever it is, is serious enough to justify deauthorisation. If we compare the wording of this section with new Section 65D(1), which deals with the process leading up to the appointment of a trust special administrator, we find a clear difference. New Section 65D states—again, I paraphrase—that the regulator may give the Secretary of State a notice if it is satisfied that a trust has already failed to comply with a notice served under Section 52 and that further exercise of Monitor's powers under Section 52 is not likely to rectify the problem. In other words, a notice under new Section 65D is there very much as a final resort when all else has failed. There is no flavour of that idea in new Section 52B. There is nothing there that suggests that a notice to deauthorise is appropriate only after Monitor has exhausted its intervention powers. Why is that?
	For example, it is quite possible to imagine Monitor being satisfied that a trust was committing a serious contravention of its terms of authorisation, while at same time believing that the contravention was capable of being remedied without deauthorisation being necessary. The absence of any provision making clear that Monitor may and, indeed, should treat its powers in new Section 52B as a measure of last resort is slightly worrying. Can the Minister confirm that it does not lay Monitor open to the possibility of judicial review?
	Let us imagine that at a certain foundation hospital, there was a serious failure of care and the course of action taken by Monitor to remedy it stopped short of going down the deauthorisation route. Let us further imagine that someone thought that that decision was quite wrong and that deauthorisation was the only appropriate course to take. Could Monitor be open to legal challenge? In other words, does new Section 52B send a signal that deauthorisation should be treated as just an alternative to the normal remedial measures that Monitor has at its disposal? I very much hope that the Minister will say that this is not so, but it is not obvious from a straight reading of the text.
	I turn now to the subject of my amendment. To add greater clarity—as I noticed that the Marshalled List does not print line numbers, whereas the amendment does refer to line numbers— the amendment seeks to leave out proposed new Section 52E in the government amendment. As the Minister has explained, we see at the end of the government amendment proposed new Section 52E, which would give the Secretary of State a statutory power to request Monitor to consider exercising its power to commence the deauthorisation of a foundation trust. I heard what the Minister had to say about this provision. She said that it amounts to a request and no more than that. Monitor is at liberty to decide not to commence the deauthorisation process and all it has to do is publish its reasons for not doing so. All this sounds innocuous, but is it? I think we should consider very carefully whether this is a step we wish to take.
	When we debated what became the 2003 Act—the Act which established foundation trusts—the one cardinal feature of the new regime, as the Government were keen to emphasise, was that Ministers should not be involved in operational decisions about the delivery of healthcare by foundation trusts. That principle was the very reason why Monitor was created as an independent regulator—accountable directly to Parliament, not to Ministers—and why foundation trusts were made accountable to their governors and members, as well as to Monitor. It was explicitly recognised that, however tempted Ministers might be to weigh in if something ever went wrong in a foundation trust, it would not serve anyone's interests if they actually did so. Other mechanisms would instead kick in. The independence of foundation trusts, and their freedom from political manipulation, were the key features that would underpin their ability to raise standards and to be responsive to the needs of their patients.
	I maintain that the power contained in proposed new Section 52E, innocuous as it may look, oversteps the line of political interference to which I have just referred. It is one thing for a Minister to make an informal request to Monitor: nobody can have an objection to that and legislation is not required for it. Here, however, we have not only a statutory power given to Ministers, but also a bit of sleight of hand. If we read the wording carefully, we see that what is termed a "request" is in fact akin to an instruction. Upon receipt of a request from the Secretary of State, the regulator has no choice but to take certain action. It has to go through the process of deciding whether it is satisfied that there is a serious contravention or failure in the trust concerned, and it has to give formal consideration to the matters listed in proposed new Section 52C. It must, then, either serve a notice to deauthorise, or publish its reasons for not doing so. In other words, Monitor cannot just say "no": it cannot just decline to take any action at all. What we see here, therefore—albeit in a disguised form—is a power of direction over Monitor. That, for me, is one step too far.
	If one thinks of the kind of situation which might give rise to a request from the Secretary of State to Monitor, it is highly likely to be characterised externally by intense media interest and intense pressure on the Government to do something about a reported problem in the hospital concerned. Ministers will find it difficult to protest, in the midst of a media feeding frenzy, that they are not accountable for what may or may not be going on. So their safety valve, politically speaking, is to put public pressure on Monitor.
	Looked at in the cool light of day, the statutory power contained in proposed new Section 52E is simply a means of allowing Ministers to grandstand on an operational issue for which, as a matter of law, they are not responsible. The proper course is not for Ministers to be given a statutory power to order Monitor about, but rather for us to remind ourselves what we agreed in 2003, which is to let Monitor do its job in the way it was set up to do and which it has proved it can do, free of political second-guessing. I should like to hear the Minister's reply to this. It will not be lost on her that I think that this entire government amendment has been rushed into the Bill with undue haste and that new Section 52E has been inserted as a result of misplaced ministerial backsliding on a key point of principle. For myself, I do not think that that is the direction of travel we should be taking. I therefore beg to move.

Baroness Murphy: My Lords, I rise to speak Commons Amendment 1 and Amendment 1A tabled by the noble Earl, Lord Howe. I should say straightaway that I have sort of jettisoned my speech after counting lines 99 to 153 of the government amendment again and thinking further about the noble Earl's amendment. For the benefit of one or two noble Lords, I ought to remind the House about Monitor and what it does. I should also declare an interest as a member of the board. As such, I should say straightaway that I have been party to the negotiations held outside this Chamber with the Government about the amendment, and after many weeks the board declared itself to be content because we felt that we had pushed it as far as we could. But, as the code of conduct reminds us, none of us sits in this House as the representative of an organisation, and I am wholly won over by the amendment of the noble Earl, Lord Howe.
	A Member of this House who is in the Chamber today asked me who on earth Monitor is as if its members were a small group of aliens parachuted in from outer space. We were created by the Government in 2003 to regulate independently foundation trust hospitals and the mental health services that come under that grouping. The organisation is accountable to Parliament and does not float in administrative space. We produce an annual report on which questions can be raised. Its membership is appointed by the Appointments Commission in exactly the same way as are the boards of NHS trusts, so we are not a peculiar bunch of independent-minded folk who do not think carefully about the impact of our decisions on public sector organisations; we are of the public sector.
	I can think of several good reasons why a trust may be returned to the Secretary of State. We already have provisions in the Bill for those which fail financially, and I can see that there could be times when quality issues require powers of intervention beyond those held by Monitor. It has draconian powers in terms of appointments to and removals from boards, for example, and together with the Care Quality Commission, can intervene and prevent services from running if they are failing dramatically. But what strategic health authorities as links in the Department of Health's chain of command, and through them the primary care trusts, can do is occasionally recontract a service or change a sector economy to ensure that a service is acting effectively in concert with other services. They can do some of the restructuring that might enable a service to reinvigorate the quality of its care. These are very rare occurrences, but I can see that it could happen. It has not happened yet, I might say, but I can see that it might.
	As we go into a time when money is going to be very tight and the temptations at the centre will be to implement mechanisms of restraint—which it has been tempted to implement before and they have usually been disastrous in the NHS—it will be very tempting for the department and for Ministers, under certain circumstances, to try to intervene more than would probably be in the best interests of local services.
	It is also important to remember that there is a group of people at the back of these foundation trusts called governors and members—a million of them—who have a part to play and local powers to intervene. We do not wish to do anything which cuts across those powers of influence. That is why the governors and members were created and why this Government were so keen that there should be some local accountability which would enable powers to be given to local people to intervene under these circumstances. I can see that there could be occasions when it would be necessary for Monitor to request the Secretary of State to rethink the system of accountability and that it should go back to NHS trusts. This is not because we believe that the Department of Health has any greater history of improving services than Monitor; as we have said, the history is worse.
	I think that, on balance, the powers in the Commons amendment go too far. They enable the Secretary of State to push when under pressure from the media and elsewhere to do so. I am entirely won over by the amendment of the noble Earl, Lord Howe, which still leaves the basic requirements for the deauthorisation of trusts in place but allows for a more sensible provision.
	There is one point which remains unsatisfactory in the Commons amendment and that relates to the period of time which Monitor is given to respond to the Secretary of State's request to deauthorise a foundation trust. The proposals require a response from Monitor within 14 days, with flexibility for the Secretary of State to set longer deadlines if appropriate. I seek reassurance from the Minister that, if Amendment 1 is adopted, an appropriate timetable for consideration of any request will be agreed with Monitor on a case-by-case basis. It is clear from our dealings with hospitals that it is likely to require more than 14 days, and a timetable should be set accordingly. I seek reassurance on that. Overall, I am very attracted to the amendment of the noble Earl, Lord Howe, and will give it my support.

Lord Warner: My Lords, it might help the House if I say a few words as the Minister who took the 2003 Bill through this House. The noble Earl, Lord Howe, has reminded us of some of our exchanges. It is certainly true that I swore undying support for the independence of the regulator on the basis that Ministers would resist the temptation to interfere in the workings of foundation trusts when things did not go quite as everyone would want them to go.
	In the case of mid-Staffordshire, neither the Healthcare Commission nor Monitor covered themselves in communications glory over the way that some aspects were handled. There are some issues on which I have some sympathy with Ministers for intervening. However, proposed new Section 52E crosses the line with regard to the assurances that government Ministers, including myself, gave in good faith about the independence of Monitor.
	I have not heard the arguments for why we need the proposed new Section 52E. Indeed, the noble Earl, Lord Howe, made some good arguments for why we do not and it is incumbent on Ministers to explain why the amendment is now necessary. What circumstances have changed since the 2003 Act to make that kind of amendment necessary?
	To add to that, the way that Monitor has behaved for five to six years is, for the most part, overwhelmingly a triumph of successful early interventions when things were going wrong in particular foundation trusts. Admittedly, many of those issues were financial but, even then, Monitor intervened with trusts whose financial circumstances were going off the rails much more rapidly than strategic health authorities, either in their current or previous form, have ever done.
	In answer to a Question that I put down a couple of months ago, the noble Lord, Lord Darzi, replied that there are still 40-odd existing trusts, not foundation trusts, that have historical deficits. That situation simply would not have happened with Monitor; those sorts of issues would have been tackled earlier. This comes back to the question raised by the noble Earl, Lord Howe: if we return a failing trust to an SHA, what guarantee do we have that the responses in putting things right for local people will be faster than they would have been if left with Monitor? I have some sympathy with the points that the noble Earl has raised.

Baroness Barker: My Lords, I shall follow on from the last point made by the noble Baroness, Lady Murphy, about timescales. The noble Earl, Lord Howe, was right to remind us that these decisions are often made in the glare of publicity when something has gone seriously wrong. We are not talking simply about financial mismanagement; as the Minister said in her introductory remarks, we are talking about the deauthorisation of a trust on grounds that include health and safety and quality of service as well as finance and other managerial matters. Those are complex and difficult matters to question and establish.
	Why are the periods of time mentioned in proposed new Section 52D, which is about the process of deauthorisation as it would be taken under proposed new Section 52B, so short? An order must take effect within five working days of when it is issued. Proposed new Section 52D(8) specifies a period of seven days after the Secretary of State makes an order for the regulator to publish its report. That is a very short time to report on potentially deep and complex matters. I would welcome some clarification from the Minister.

Baroness Pitkeathley: My Lords, I speak in favour of the Commons amendments; I believe that they will provide more reassurance to patients and the public. However, I ask for some clarification from my noble friend on a couple of points about regulation. I declare an interest as chair of the Council for Healthcare Regulatory Excellence. It is important that patients know who they can expect to be regulating services when trusts are deauthorised or identified as unsustainable and come under the Secretary of State's powers of direction. Is it going to be Monitor or the Care Quality Commission? Are they going to fight over it? We need to be very clear about that. If the purpose of regulation is to guarantee patient safety, it is important that patients are informed and have clear directions about where to take their concerns. I would welcome clarification about that.
	I also have some concerns about the potential impact on revalidation, especially for doctors, of the trusts which enter these proposed arrangements. Medical revalidation at the local level relies on the responsible officers—who are likely to be medical directors— to maintain the process of revalidation. We need to be assured that the function of responsible officer could still be discharged in such circumstances. If not, what other measures could be put in place to avoid what might be unintended consequences for the revalidation of doctors?.

Lord Patel: My Lords, I require clarification about the current provisions for Monitor's authority to deauthorise a trust and pass it back to the Secretary of State. We have heard several noble lords and the noble Baroness, Lady Murphy, a member of the board of Monitor, say specific things about the powers that Monitor has in regard to financial controls. The issue with mid-Staffordshire was not as much about financial control as about patients' health and safety. If we can be reassured that Monitor has the powers currently to act on issues related to patient health and safety, to bring the trust into order and maybe even deauthorise it, then I would be content that these amendments are not necessary. I am persuaded by much of the argument made by the noble Earl, Lord Howe—it is difficult not to agree with his arguments as they are often so well studied—but one issue that concerns me is whether Monitor has the provisions currently to act solely on patient health and safety issues and not only financial issues.

Baroness Meacher: My Lords, I support the comments of the noble Earl, Lord Howe. I have been involved in the National Health Service off and on over the past 30 years and Monitor has been the first body to really transform trusts as I have been aware of them. Inefficiencies in the NHS, I am afraid, are a commonplace; they have been there over the years. In their preparations to become foundation trusts, the trusts have to work extremely hard to sort out their governance, to sort out their boards, to appoint new people and to improve their professionalism. Certainly our board—it is quite typical—is now completely different because we had to be different in order to justify our existence as a foundation trust. Therefore I find it difficult to think that somehow it would be a step forward for a trust to be moved from regulation by Monitor to some sort of regulation by the Secretary of State.
	I agree with the comments that have been made by my noble friend about the fact that Monitor has been required to focus on finance until very recently. My understanding now is that Monitor will have a very good look at the quality accounts of every foundation trust in order to judge us on our quality of service as well as our financial probity. On that basis, the government amendment will be unhelpful and I add my support to the words of the noble Earl, Lord Howe.

Lord Crisp: My Lords, I also speak with sympathy for the position that the noble Earl, Lord Howe is advocating. I was chief executive of the NHS when Monitor was created and therefore I have some background in it. There are two points to make. First, there are times when it would be sensible to deauthorise a foundation trust, and that is when the problem is not resident within the trust but within the wider local health economy. That may be solved by sorting out issues on a slightly wider scale than only within the individual organisation.
	I agree with the point about the separation of government and DH from Monitor. The point of Monitor was that it would be independent, objective and ultimately accountable to Parliament. However, this amendment seems to suggest that when government, for whatever reason, decides that it wants Monitor to answer to it, it is expected to do so on a fortnightly basis. That seems a very short period of time and takes away the basic point. We wanted to see these sorts of decisions taken in an objective fashion and as far away as possible from any political considerations. It is on that basis that I have a great deal of sympathy with the noble Earl's position.

Baroness Thornton: My Lords, there is no doubt that the noble Earl is right and that this is not the most satisfactory way in which to proceed with legislation. However, as he also said, we are where we are.
	The amendments strengthen the foundation trusts regulatory regime and reaffirm the Government's commitment to the foundation trust ideal and the independence of Monitor. They fill a gap identified in the wake of the events of mid-Staffordshire by showing that foundation trust status must continue to be earned and by providing further democratic transparency to foundation trust regulation.
	The noble Earl's amendment would remove new Section 54E from Commons Amendment 1, which allows the Secretary of State to formally request that Monitor consider deauthorising a foundation trust. I think that the noble Earl would agree that the independence of Monitor is vital and that maintaining this independence is an extremely important part of the foundation trust model. The Government's proposals are based on that very principle. They will preserve Monitor's independence, as the decision to deauthorise rests solely with Monitor.
	Section 54E does not limit Monitor's independence when making decisions. However, it reflects that the Secretary of State is ultimately accountable to Parliament for the overall provision of NHS services. In extreme cases, Parliament and the public might legitimately expect that there should be an enhanced level of transparency. Indeed, in another place, Conservative Members representing constituencies served by the mid-Staffordshire trust pushed us to go further, insisting that the Secretary of State should be able to force deauthorisation. The amendments make it clear that Secretary of State could only make requests, not force any action. This is because, while we recognise the concerns raised by honourable Members in another place, we believe in and are committed to the benefits of independent regulation.
	The circumstances in which such requests may be made are also constrained by the proposals. They do not appear from the ether, as the noble Lord, Lord Crisp, suggested, to be dealt with in two weeks. Section 54E provides that a request could be made only when it appeared to the Secretary of State that there were grounds for Monitor to consider deauthorisation; that is, it must be satisfied that there has been a breach that is sufficiently serious to justify deauthorisation. As we have heard, it will be for Monitor to set out the detailed matters to be considered, using the framework in the amendment. I am sure that we can all agree that transparent decision-making in difficult times is vital. This is a valuable lesson following the events of mid-Staffordshire.
	I turn to some of the points made by noble Lords in this debate. The noble Earl and the noble Lord, Lord Patel, referred to the evidence of a regulatory gap. We think that mid-Staffordshire is a wake-up call that shows the necessity for the option to deauthorise, because it became an issue of public confidence. That should not be underrated here.
	On patient safety and public confidence, it is important to send a message that foundation trust status is not a one-way ticket. Ministers need to have a way in which to make their views known on such an issue of public confidence. However, this is not about correcting the past; it is about driving behaviour in the future. It is only one of a number of things that we have done in relation to mid-Staffordshire and this issue. Monitor does an excellent job and this power will strengthen its hand, as well as the Government's.
	The noble Earl and others asked how this measure will benefit patients. The power to deauthorise makes it clear that foundation trusts must maintain the high standards that are expected of them and that foundation status is not something that can be taken for granted. We believe that it will act as a further incentive to foundation trusts to maintain the highest standards of care for patients. We believe that this, linked to the regulatory regime that my noble friend referred to and to which I will return in a moment, is the best way forward.
	The noble Earl also asked why the Secretary of State would have any better skills than Monitor to deal with issues such as those in Maidstone and Tunbridge Wells. The new performance framework relating to NHS trusts, which has been rolling out across the NHS since April this year, will improve the transparency and consistency of the process of identifying and addressing underperformance in NHS trusts. The performance framework clearly emphasises the roles and responsibilities of PCTs as commissioners and strategic health authorities as system and performance managers in driving up improvements, alongside the transparent role for the Department of Health. We believe that world-class commissioning and the strategic health authority assurance programme will complement the framework by holding PCT commissioners and SHAs to account for the roles that they play in tackling underperformance and failure. Consistently poor performers will either be supported to recover or their exit will be managed through a time-limited process.
	The noble Earl asked why there was no requirement in new Sections 52B and 65D to exhaust other intervention powers. He asked whether that lays Monitor open to judicial review. Of course, Monitor is always potentially at risk of judicial review when exercising its powers and has to exercise its powers in accordance with the principles of public law. In deciding whether to deauthorise, Monitor will need to consider whether it is dealing with this in an orderly fashion by steps that cannot be used against it. That will be a relevant factor in considering whether it should exercise its powers in this manner. If Monitor can show that its decision whether to deauthorise or not is reasonable in the circumstances, that decision will be lawful.
	I was not completely clear whether the noble Baroness, Lady Murphy, was speaking in favour of Monitor or not, but I was surprised by her intervention. Monitor has declared itself content with these proposals. Indeed, the amendments give Monitor an important new power. The Government are fundamentally committed, as I have said on many occasions, to the independence of Monitor. Surely we can all agree that, when patients' lives are at risk, action needs to be taken. Both the Secretary of State and Monitor should be able to defend their actions publicly. Given the amount of consultation with Monitor that led to this amendment being tabled, I was surprised at the noble Baroness's intervention, although I accept that the noble Earl is very persuasive in these matters. In addition, Monitor's guidance will deal with the matters that it considers when deciding whether to deauthorise. That will include consideration of whether lesser steps of intervention would be appropriate.
	Again on the issue of Monitor's consultation process, I quote from the consultation document, which states:
	"In such circumstances, we ... accept that it would appropriate for the Secretary of State to request that Monitor consider proposing de-authorisation and that Monitor's response should be published".
	That is what Monitor had to say on this matter.
	The noble Baroness, Lady Barker, raised the issue of 14 days and the timescale. The proposal is for 14 days or longer. In extreme circumstances, speed is of the essence, but so is due process. If the Secretary of State sets an unreasonably short timescale, he will be subject to judicial review. The Secretary of State will have to work closely with Monitor to ensure that the appropriate timescales are met.
	My noble friend Lady Pitkeathley and the noble Baroness, Lady Meacher, raised the issue of the CQC and Monitor. As noble Lords may remember from earlier discussion of the Bill, Monitor and the CQC are bound by law to work together. In September 2009 they signed a Memorandum of Understanding. This takes account of the relationship and details the way in which they will work together and alongside each other in delivering their respective statutory functions. The CQC is an independent corporate body established under the 2008 Act. It is responsible for the regulation of the quality of health and social care services. Monitor is an independent corporate body established under the 2006 Act. It is responsible for authorising, monitoring and regulating NHS foundation trusts. They have to collaborate and co-operate together to ensure the effective discharge of their statutory functions and efficient and effective regulatory frameworks for NHS foundation trusts.
	My noble friend Lady Pitkeathley asked about the responsible officer for medical revalidation. The amendment will have no impact on this. I am sure that we can agree that transparent decision-making is vital in these difficult times. I hope that the noble Earl will feel reassured that the proposals ensure that decision-making remains, rightly, with Monitor. I hope that he will also support the Government's view that transparency is vital in these difficult circumstances and feel able to withdraw his amendment.

Baroness Murphy: Before the Minister sits down, I want to say a word of clarification and ask a further question. I can clarify that I was indeed speaking on my own behalf, as I believe everybody in the House should. We are all members of organisations; we do not always speak on their behalf. I was expressing a personal view. Much of the amendment is good and Monitor has been supportive of those parts of it.
	As a point of clarification, I would like to ensure that the Minister and other Members of the House are aware that the quality standards by which Monitor assesses, and has formerly assessed, foundation trusts are exactly the same as those used by ordinary National Health Service trusts. Information from the Healthcare Commission until last week, information that is gathered by local organisations and from the governors and members, and information from achievement-against-performance targets form the basis on which foundation trusts are monitored, so they are just the same.
	Monitor is now involved with the Care Quality Commission and the Department of Health. The chairman sits on the National Quality Board and is working closely with other organisations to see how we can all monitor quality better in a prospective fashion, to complement the way in which the CQC monitors it retrospectively so that our systems dovetail and work together. I hope that that is clear. When talking about mid-Staffs, it is important to understand that it was being monitored in exactly the same way as every other NHS trust.
	Finally, I raise the issue of new Section 52E. All it does is enable the Secretary of State to make a request. Why is it necessary for the Secretary of State to have such a power in a Bill? There is no reason not to exclude that section, which sounds pretty heavy and interventionist and requires a response within 10 days. Nothing in normal day-to-day non-departmental government body business would preclude the Secretary of State from making a request. Most months now, expressions of anxiety are passed between various organisations in the health field. I cannot imagine a situation where this measure would be necessary. On that basis, I do not understand why it needed to be included in the first place. The rest of the amendment is very helpful to the process of regulation without it.

Lord Patel: Further to that question, was it not the case that in the first instance patients and their families showed concern about the care and safety of patients who were being treated in mid-Staffordshire? In that circumstance, who would patients approach? Would it be the Secretary of State, the Minister, their Member of Parliament, Monitor or the Care Quality Commission? Who would they approach?

Baroness Thornton: The only reason why I expressed surprise at the intervention of the noble Baroness, Lady Murphy, is that she opened her remarks by saying that she had been involved in the lengthy discussions between Monitor and the Government, and Monitor has said that it was very satisfied with this process. Obviously the Secretary of State can request information and can request Monitor to consider matters at any point, and does so, but the measure that we are proposing would mean that Monitor was bound to explain its answer. That is the key point. That is why new Section 52E is framed as it is. Of course, we know that Monitor applies the same standards to foundation trusts as are set out in the legislation for all CQC registration. I say to the noble Lord, Lord Patel, that, were a trust to be deauthorised, it would then go back into the NHS system and the same framework for the patient voice to be heard would kick in.

Lord Mackay of Clashfern: My Lords, is new Section 52E premised on the idea that the Secretary of State may have information coming to him that will have escaped Monitor? If that is not the case, I do not understand why he should take it on himself to tell Monitor about something that it is already investigating. I should have thought that one's basic confidence in a foundation trust was based on the independence, skill and competence of Monitor. If you have a system that allows the Secretary of State to say to Monitor, "You are not doing this very well", that will tend to reduce confidence in Monitor and reduce public confidence in the system, as it would suggest that public confidence could be bolstered only by the fact that the Secretary of State had power to intervene.

Baroness Thornton: The Secretary of State will not intervene; he will ask Monitor to consider deauthorisation. The key point is that Monitor then has to explain its decision. It can say no, as it is an independent regulator. It has every power to say no but, if it chooses to say no, it has to do so publicly. This is about transparency and having to say no on the public record. The measure also gives Monitor a new power to deauthorise, which it did not have previously and which it has said that it wishes to have.

Earl Howe: My Lords, I thank all noble Lords who have taken part in this debate, not least those who have supported the position that I have taken. I am particularly grateful to the noble Baroness, Lady Murphy. Having listened to her, I accept that there could be rare circumstances in which the power that the Government are seeking might be warranted and might be appropriately used.
	However, the main issue that I raised relates to new Section 52E. Essentially, the Government have looked at mid-Staffordshire, acknowledged that there has been a failure of management and decided that the way to solve that management problem is by legislating. That is a classic piece of wrong-headedness, although, for the reasons that I gave earlier, it could be even worse.
	New Section 52E is all about putting Monitor under political pressure and, as my noble and learned friend said, could serve to do the very opposite from what the Government are intending; namely, it could undermine confidence in the system. If people do not think that Monitor is doing its job properly, that is an even worse situation. Not only does Monitor have to act when instructed or requested to act, but it may have only 14 days in which to do so because, as the noble Baroness, Lady Barker, pointed out, the Secretary of State could insist on 14 days. If it then delivers what seems to the Secretary of State to be the wrong answer, there seems to be nothing to prevent the Secretary of State from repeating the request straightaway, thereby redoubling the political pressure. To me, none of that is a very appealing prospect.
	We then come back to whether deauthorisation is a measure of last resort. From the Minister's answer, I was not entirely clear about that. The fact remains that Monitor could be trapped by the wording of the amendment. Having taken a detailed look at the facts of the particular case, it might well find that the trust was in breach of its authorisation terms. It might well find that that breach was serious enough to justify the Secretary of State making an order to deauthorise a trust yet, despite that, conclude that it was inappropriate to go down the deauthorisation route. How easy will it be for Monitor to hold fast to that conclusion in the face of intense political pressure? Without wording in the new section to make it clear that deauthorisation should be considered only when other measures have failed, that will not be easy at all.
	The way to secure improvements in the performance of foundation trusts is much more straightforward than any of this, and noble Lords have referred to it. It is to make sure that there is close liaison between the Department of Health, Monitor and the Care Quality Commission. We do not need legislation to do that. I am sufficiently encouraged by the support that I have received from other noble Lords that I should like to test the opinion of the House.

Division on Amendment 1A
	Contents 103; Not-Contents 164.
	Amendment 1A disagreed.

Motion agreed.
	Motion on Amendments 2 to 10
	 Moved by Baroness Thornton
	That this House do agree with the Commons in their Amendments 2 to 10.

Baroness Thornton: I have spoken to these amendments with Amendment 1.
	Motion agreed.
	House resumed.
	Motion on Amendment 11
	 Moved by Baroness Thornton
	That this House do agree with the Commons in their Amendment 11 and do propose Amendments 11A to 11G as consequential amendments to the Bill.
	11: Page 26, line 4, leave out "or imposing requirements in relation to"
	11A: Page 26, leave out lines 6 to 10
	11B: Page 26, line 12, leave out "or requirement"
	11C: Page 26, line 13, leave out "or requirement"
	11D: Page 27, line 12, leave out "or imposing requirements in relation to"
	11E: Page 27, leave out lines 15 to 19
	11F: Page 27, line 21, leave out "or requirement"
	11G: Page 27, line 22, leave out "or requirement"

Baroness Thornton: My Lords, I beg to move that the House do agree with the Commons in their Amendment 11. I shall also speak to government Amendments 11A to 11G.
	Amendment 11 was one of a series tabled by my right honourable friend the Member for Makerfield, Ian McCartney, and the honourable Member for Colchester, Bob Russell, in the other place. Their amendments sought to remove the power to impose restrictions on sales of tobacco from vending machines, so that the national authorities in England, Wales and Northern Ireland would only be able to make regulations to ban tobacco sales from vending machines completely.
	As I have previously made clear, the Government recognise that there is a serious problem with young people accessing tobacco from vending machines and that action needs to be taken. Vending machines are currently the usual source of cigarettes for 10 per cent of 11 to 15 year-olds who say they smoke. In 2008, the Local Authorities Co-ordinators of Regulatory Services reported that 40 per cent of test purchases carried out by trading standards across England resulted in underage sales from vending machines.
	I do not intend to rehearse the many arguments we have had about nicotine being highly addictive, or that some 200,000 children aged between 11 and 15 are regular smokers. It is clear why the Government are so concerned.
	As we debated in your Lordships' House, the issue of tobacco-vending machines continues to raise strong views across all parties. On Report in the other place, all parties were offered a free vote and Amendment 11 was accepted. As it was the result of a free vote, the Secretary of State for Health made clear in his Third Reading speech in the other place that the will of that House would be respected and the Government would not seek to overturn the amendment.
	This amendment requires that we do what 16 other European states have done—ban the sale of tobacco from vending machines. The UK leads the world on many tobacco-control policies and yet in this aspect we are behind. The tobacco-vending machine industry has had at least 10 years to get the operating companies to adhere to their voluntary code to stop underage sales from vending machines and this has not been successful.
	The consequential government Amendments 11A to 11G give Amendment 11, agreed in the other place, its full effect. These consequential amendments remove all remaining references to restrictions from the vending-machine clauses and omit wording in the Bill which is not required in the context of a ban. They replicate the other amendments that were tabled by the right honourable Member for Makerfield on Commons Report but which were not reached. They ensure that Clause 22 would be workable and also align Clause 23 on Northern Ireland with England and Wales. We can confirm that Ministers in both Wales and Northern Ireland are also committed to prohibiting the sale of tobacco from vending machines in accordance with these amendments.
	The Government are committed to protecting our children from the harms of smoking and the prohibition of sales of tobacco from vending machines represents a step forward to achieving this aim. I beg to move.
	Amendment to the Motion
	 Moved by Earl Howe
	As an amendment to the Motion, leave out from "House" to end and insert "do disagree with the Commons in their Amendment 11".

Earl Howe: My Lords, in considering the amendments before us, we find ourselves in another somewhat unusual situation. Noble Lords will remember that when the Bill underwent scrutiny in this House during the early part of this year there was an outbreak of harmony between these Benches and those of the Government when we debated the provisions for cigarette-vending machines.
	I do not want to misrepresent the views of anyone in this Chamber but no noble Lord felt it was defensible that children and young people under the age of 18 should continue to have access to cigarette-vending machines.
	I am absolutely clear that Ministers were right to seek powers in the Bill to restrict access to such machines with that thought in mind. The exercise of the power would force vending-machine operators to come up with credible and workable systems that would have the effect of denying underage would-be smokers the means of buying cigarettes in that way. Furthermore, there was a wide measure of agreement that if, after a period of time, those measures were shown not to be effective—in other words, that children were still habitually gaining access to cigarettes from vending machines—Ministers should consider exercising the additional power set out in the Bill to ban the machines altogether.
	That two-step approach was, I believe, proportionate and sensible. I say that for two main reasons. The first is that vending-machine operators have not been slow off the mark in responding to the challenge that they have been set. A number of technologies exist which are designed to prevent underage persons from gaining access to vending machines. Not all of them give one confidence that they will deliver in the way that they are supposed to, but at least one technology that I have personally seen demonstrated, the radio frequency control system, not only convinced me that it would work efficiently and well but is successfully in use in a number of locations. The Department of Health recommended the use of that system in its recent consultation document. I am personally as sure as I can be that the Government were right to believe that there exists a workable means of delivering the policy objective that they have set themselves.
	The second reason why I support the Government's first approach is that to proceed immediately to an outright ban on vending machines would bring about disproportionate harm and damage. The damage would be felt by pubs, which stand to lose trade from people who, from time to time, wish to access their vending machines but, more seriously, it would have an instant and devastating effect on those who depend for a living on supplying and operating such machines. There are roughly 650 people in this country whose livelihoods are earned in that way, and several hundred more in the supply chain. I do not believe that any sort of case has been made for bankrupting those individuals and putting them on to the dole queue without giving the regulatory route a chance to work.
	Parliament should contemplate taking that drastic step only when all else has failed. It is not a step that should be taken lightly. The problem is that, unless we are very careful, that step will indeed be taken lightly. The Government have allowed themselves to get into the position of acquiescing in the result of a debate in another place that was arrived at not after a free vote, nor even after a whipped vote, but after no vote at all. The amendment in the name of the right honourable Member Mr Ian McCartney was agreed to by default after the Government Whips failed to produce tellers. That fact puts this House into a rather different situation from the one we normally face at Lords' consideration stage. In moving that the House do disagree with a Commons amendment, we are usually saying we believe that the judgment taken by another place was wrong. In this case, however, the other place did not have a chance to exercise its judgment at all. We simply do not know what the collective will of the House of Commons would have been.
	For that reason alone, it is surely right that we ask the other place at least to go through the Lobby before we put 650 people out of work. Of course, we know one thing. We know that the Government have not changed their minds on the merits of the Bill as it originally stood. How do we know that? When the Division was called in another place on the McCartney amendment, Ministers were queuing up to vote against it. The Government had not given way at that stage. Indeed, I am sure that the Minister still believes in her Government's policy. She has simply allowed herself to be persuaded that, constitutionally, it would be improper for her to carry that policy through. In moving this amendment, I am suggesting to her in the strongest terms that that view is misconceived and, indeed, that she owes it to the other place to send this matter back for further consideration. She certainly owes it to those whose jobs depend on the way that this matter is finally determined.
	I have no wish to be impertinent to the Minister or to overegg the case I am making, but if she does not give way on this, and if she were to carry a vote in her own Lobby, she and her colleagues will bear personal responsibility for the consequences that will ensue. There is still time for this matter to be sorted out before Parliament prorogues. If the other place is given another chance to determine the issue properly, and if it decides on a free vote that the McCartney amendment should stand, I will be in no position to argue. As it is, I argue very strongly indeed that the parliamentary process is in danger of being grossly subverted, which is why I beg to move.

Lord Walton of Detchant: My Lords, the noble Earl is, as always, immensely persuasive, and there are very few occasions on which I can claim to find myself in total disagreement with what he has said. There is no doubt whatever, as every Member of this House must accept, that tobacco is a potentially lethal product. It is also highly addictive, and there is clear epidemiological evidence that once children begin to smoke, they have great difficulty in giving up the habit, although many succeed. When this issue was debated fully and extensively in Committee in your Lordships' House, many of us, including me, strongly supported an amendment to abolish the sale of cigarettes from vending machines,. However, the Government did not accept that amendment and claimed that, as an interim measure and pending further consideration, they wished to impose stricter age-verification restrictions and supervision as regards vending machines.
	They did that despite the fact that I presented evidence that in the north-east of England, from where I come, a series of trading standards officers embarked upon an exercise in which they recruited significant numbers of volunteer young people below the age of 16 and took them round a series of establishments in which vending machines were installed to see whether they would succeed in buying cigarettes. In the majority of cases—60 per cent and sometimes 70 per cent—the children had not the slightest difficulty in purchasing cigarettes from vending machines, contrary to the existing law. In one establishment, the landlord gave the child change to put in the machine to purchase cigarettes.
	The British Heart Foundation has recently conducted a number of surveys. It found that test purchases consistently show that young people regularly purchase cigarettes from vending machines. In 2008, 12 per cent of children and young people who were regular smokers usually bought their cigarettes from vending machines. The British Heart Foundation estimates that 23,000 11 to 15 year-old regular smokers access their cigarettes in this way. It has also conducted a more detailed survey of landlords in establishments where vending machines are available. It found that the age-verification restrictions that the Government initially proposed were viewed as unworkable and as a burden by a large number of landlords. The survey showed that nearly two-thirds—63 per cent—of landlords said that, during busy times, it would be impossible to check IDs and operate a machine within their line of sight. More than two-thirds—68 per cent—of pub landlords said that current proposals would be a significant extra burden on their business. Eighty-two per cent of landlords describe the revenue they receive from vending machines as "unimportant". Three-quarters of landlords would rather remove the machine than risk prosecution for underage sales. Despite the potential deficiencies in another place to which the noble Earl referred, I think Ian McCartney did us a very good service by proposing the amendment that was accepted in your Lordships' House. I trust that your Lordships will accept that amendment as tabled now by the Government and reject the amendment of the noble Earl, Lord Howe.

Lord Campbell-Savours: My Lords, I have a little dilemma. I was present in Committee when the noble Lord, Lord Walton, was speaking to these matters and produced the very substantial evidence for the case he has just made again today. Since then, however, something has happened. In the Bishops' Bar today, I was approached by my noble friend Lady Golding, who showed me a document describing a showing in the House last week of a particular piece of equipment, which I am not as yet satisfied that MPs were aware of when they took their decision.
	I dissent from the view of the noble Earl that, where a vote has not taken place, it is not necessarily an advised opinion of the House of Commons. The fact is that, where a vote was not taken, it was because the House did not object to the measure being put before the House. It could be argued that it has considered it, and there was shown a position of unanimity, even though it was the view of the noble Earl that there were some Ministers who wanted to vote against the McCartney amendment.
	The document shown to me by my noble friend Lady Golding should be brought to the attention of this House, because the noble Earl, Lord Howe, has alluded to it. It shows that there is available in the United Kingdom, in 600 public houses in the country, a piece of equipment that is managed and operated by a person standing behind the bar. I want to go through the sequence of events, because I believe that it actually deals with all the concerns that my noble friend has alluded to, and which Ian McCartney must have had in mind when he was moving his amendment.
	"Step 1: customer requests for the machine to be enabled"—
	in other words, to be made operational.
	"Eye contact is made by the member of staff"—
	that is, the person behind the bar, to the customer who wishes to buy the cigarettes—
	"and if necessary identification is requested"—
	in other words, if the person looks underage, then obviously the bartender would not respond in the way the customer would wish.
	"Step 2: Once age verification has taken place, and the staff are certain that the person is over 18 years of age, the machine is enabled".
	In other words, it is made operational.
	"Step 3: The member of staff observes the sale, to make sure it is the person whose age they have verified making the purchase.
	Step 4: The machine is then ready for use to vend one packet to the customer.
	Step 5: After vending one packet of cigarettes, the machine reverts to standby".
	In other words, it switches off automatically. Therefore, throughout the whole process of the cigarette packet being purchased from that machine, the person behind the bar is responsible for what has happened by having control over the button which enables the machine. I presume, therefore, in those conditions, that a person under 18 would not be able to purchase cigarettes.
	I am not against what Mr Ian McCartney has suggested, but what I want to know is whether the Commons knew about this equipment when the decision was taken. They should have been aware of a system that the Government would have tested in the event that the legislation in its proposed form prior to the Ian McCartney amendment would have been passed. Were Members of Parliament aware of this equipment, of which I suspect most noble Lords were completely unaware until the noble Earl, Lord Howe, referred to it in his contribution and I outlined it in greater detail in mine?

Lord Palmer: My Lords, I, too, should like to support the noble Earl in his impassioned speech, and particularly with his reference to the farce at the other end of the building. As I have said many times during the course of this Health Bill and indeed during the passage of previous health legislation, it is the hypocrisy of Her Majesty's Government that many of us find difficult to understand. I have called twice for a complete ban on the sale of all tobacco products, the logic being that if we are not meant to smoke, we should not be able to buy them. One of the most awful things about trying to ban these vending machines is that it will serve only to increase the illicit sale of tobacco in this country.
	I should like to remind the noble Baroness that at the moment it is estimated that the Treasury loses £8.5 million a day as a result of the illicit tobacco trade. To save the noble Lord, Lord Faulkner, having to go to the Box, that works out at £3.1 billion a year. It is for these reasons that I wholeheartedly support the noble Earl.

Lord Naseby: My Lords, having listened to a number of noble Lords speak on this amendment, I should like to say that my noble friend Lord Howe is absolutely correct. As colleagues know, I have had the privilege of serving as Deputy Speaker and Chairman of Ways and Means and I have checked on what happened that evening. To be frank, the House was in a fair degree of turmoil. It was not a considered decision made on evidence. Indeed, some of the evidence was wrong because Ian McCartney said that no product considered dangerous other than cigarettes may be vended, but alcohol can still be vended today. That was an inaccuracy in his speech.
	However, that is not the point, rather it is the one made by my noble friend Lord Howe, which is that the House did not give a view one way or the other. Further to that, my friend the noble Lord, Lord Campbell-Savours—I call him that because for many years we served on the Public Accounts Committee together—is right, and indeed I have been aware of the report for a while. It is based on completely new technology, and what I find confusing is that this has been done in consultation with the Department of Health. The department has been consulted and encouraged the tobacco industry, following our Committee stage, to go for this sort of development. Trading standards, referred to by the noble Lord, Lord Walton, has been consulted and is in favour of this. To my knowledge, there are no trading standards officials who are not saying that this is a major development that will restrict almost entirely the underage procurement of cigarettes from vending machines. The technology is based on radio frequencies, and I am willing to lend my copy of the report to colleagues who wish to read it.
	If the Department of Health, following our Committee stage and encouraged by the Minister, is co-operating on this work, and if the vending machine companies which now have not far off 1,000 of these units out in the trade, and the trade is not 80 per cent against it—they are almost 100 per cent in favour, based on a much bigger sample than the 200 involved in the British Heart Foundation research before this was even mentioned—then this is a changed situation.
	My noble friend Lord Howe is correct; the other place does need at least to consider these developments and the Minister needs to make matters clear to us, because when I made an intervention the other afternoon—I think it was on 2 November—she said that the Government has allowed operators more than 10 years to,
	"tighten up their operations to prevent underage sales of tobacco to children and young people. That is the context in which the decision was taken in another place".—[Official Report, 2/11/09; col. 3.]
	It was not. It was chaos. The Minister is wrong, because she told us in Committee, and I believed her, that there was now to be a two-year period during which the Government would observe what was happening. They have joined in producing some amendments and new technical developments which are very encouraging. I hope the Minister will answer this because it seems to me that there is a terrible danger of the Department of Health having totally misled this industry, if it is not going to pay any attention to a major technical improvement of the situation.
	It is not just a few people that we are talking about. We are in the middle of a recession and we are putting at risk 200 companies. Yes, they are small companies, SMEs, but nevertheless directly employing 650 people and indirectly, nobody knows exactly how many, but there will be a couple of thousand. What is the point of slavishly saying, the Commons voted, they did not know what they were voting about and we will put at risk all these people? The Minister has a responsibility, frankly, not to play with people's lives, at least to weigh up what her own department—and she, I had thought—was encouraging. You cannot, in this day and age, kill off people's livelihoods because an amendment is inadvertently voted on in another place. I plead with the Minister to recognise this situation.
	My noble friend Lord Howe has put forward what I think is a very reasonable suggestion and one that I think the industry would understand. It is for the Commons, in the end, to make the decision. It is not for this House to make it when we know from the facts that it was not properly considered in another place.

Baroness Finlay of Llandaff: My Lords, if I may just comment briefly and not delay the House too long, the reason that we had this debate on the Bill when it was with us was precisely because we did not want to play with other people's lives. We were aware of the dangers of tobacco. It is not only children; those who are trying to stop smoking find it much more difficult when they are tempted by having vending machines there. It is part of an overall tobacco control strategy. On vending machines, I find it difficult to think that there is not another solution and that these machine manufacturers will go out of business, but I do not dispute what has been said.
	As for new technology being in place, I find it difficult to believe that it has emerged since we had the debate here and that it was not in existence previously and could not have been known to the other place. Many of us in this House were very keen to see this go in and many of us were very glad to see the importance recognised of the impact on people's lives in terms of life expectancy, morbidity and the chronic disease states that we see in smokers. Anything that decreases that enormous burden on the individual, undermining their quality of life, as well as the burden to the state of the cost of their care, would have been welcomed when this amendment came from the Commons.

Lord Maclennan of Rogart: My Lords, I see three issues that have come under consideration in this debate. I would not want to protract it greatly, but one has not been addressed. The argument of the noble Lord, Lord Walton, on the harm that can be caused by tobacco commends itself to most people in this House, whatever view they take about this amendment. Therefore, like a lot of others, I favour restricting the sale of tobacco as extensively as possible—that is a personal view. However, as to the proposed exception, which has been supported by the noble Lord, Lord Campbell-Savours, and the noble Earl, Lord Howe, which might be made because of a technology which has been found to make it more possible to restrict the sale of tobacco to young people, it appears to me that there is some unnecessary impracticality in that. No doubt it is technically possible, and they have explained how, but the problem appears to be that it requires the full co-operation of the vendor to be effective, and it is highly probable that the vendor will make his or her own assessment of whether the sale is likely to be uncovered. That raises a policing point. The elaboration of the enforcement of that law and the unnecessary creation of a new offence would also weigh against our rejecting the McCartney amendments.
	My third point is that it is not for this House, although we can observe and comment on the procedures of another place, to act as a policeman. For that constitutional reason, we should be silent on this point.

Lord Monson: My Lords, I support the Motion moved by the noble Earl, Lord Howe, for three good reasons. The first is that it would restore the situation to what the Government consistently declared for month after month they wanted, and almost certainly privately still would want but are reluctant to admit for fear of irritating their Back-Benchers in the other place, so many of whom are infuriated by the Government's response to the Clegg and Kelly proposals. Let us remember that only six months ago, on 6 May, the noble Baroness, Lady Thornton, said:
	"We are ... looking ... to new mechanisms being trialled here in the UK to ensure that the most effective approach is taken to tackle this problem. Should it become necessary"—
	those are the critical, operative words—
	"we are committed to using the power in this Bill to prohibit cigarette vending machines altogether. We intend to introduce requirements on vending machines from October 2011 and to measure their efficacy over a period of two years. Should underage sales from vending machines remain a problem after that period we will move to ban them".—[Official Report, 6/5/09; col. 600.]
	That is a fair, balanced and responsible approach.
	The second reason is that a blanket ban, as the noble Earl, Lord Howe, and the noble Lord, Lord Naseby, pointed out, would cause much dislocation and hardship, with a number of long-established businesses going bankrupt and many hundreds of people losing their jobs at a time when unemployment is forecast to get progressively worse. I have to tell my noble friend Lady Finlay that unfortunately these machines cannot be converted to selling anything else.
	The third reason is perhaps the most important, whether we happen to be on the libertarian or the restrictive side of the general smoking debate. Although we all, whichever side we are on, want to discourage under-18s from taking up smoking, the Commons amendment could be counterproductive and result in more underage people smoking than would have been the case if the clause had been left alone. The new machines referred to by the noble Lord, Lord Campbell-Savours—incidentally, they stock only legal, duty-paid cigarettes, apparently quite a rarity in certain northern cities—will be tightly controlled and monitored. If they are banned, the cigarettes that pubs and similar places have to stock will have to be kept under the counter, loose. At busy times, hard-pressed bar staff will find it difficult to keep tabs on them. This will almost certainly be taken advantage of by wily teenagers.
	Let us revert to the sensible compromise put forward by the Government six months ago and retained until quite recently, to give the new machines a trial, see if they actually work and cut down teenage smoking, and then—but only then—move to ban them altogether if necessary.

Lord Patel: My Lords, I am pleased that we have an opportunity to accept this government amendment, which will ban cigarette vending machines. We have plenty of evidence that cigarette vending machines are the main source of cigarettes for children. Evidence from the British Heart Foundation puts the figure at 23,000 children in England and Wales. Earlier this year, a test purchase exercise in south-west England found that 73 per cent of attempts by 15 year-olds to buy cigarettes resulted in a sale. Three-quarters of a million children under 16 take up smoking. Any attempt to reduce that is beneficial. Arguments are made about the technology that can be used; methods involving radio frequency, for example, are being promoted by the National Association of Cigarette Machine Operators. However, all technologies fail; all technologies can be got round in an attempt to get cigarettes from vending machines.

Lord Campbell-Savours: It would be an offence.

Lord Patel: It is an offence now not to use the technology that is—

Lord Campbell-Savours: But does the noble Lord accept that, in the event that members of the public took the decision to enable a machine to allow a child to make a purchase, that would be an offence and they could be prosecuted?

Lord Patel: It is an offence now not to use available technology such as tokens and infrared signals, but it is proven that children are able to get cigarettes from vending machines.
	The other argument used is about the jobs that will be lost and the damage that this will do to the economy. They are the same arguments that we have heard in other debates. We were told that thousands of jobs would be lost and that all Patels would close down their corner shops because tobacco would not be displayed at the point of sale. I do not think that that has happened, so I do not buy the argument that loss of jobs will ensue. The only argument that I buy is that vending machines promote the taking-up of cigarette smoking among children. I find it very persuasive.

Lord Crisp: My Lords, as one of those who proposed the original amendment with the noble Lord, Lord Walton, I am delighted to support the Government's amendment. Most Members of the House seem to agree that the unsupervised use of vending machines makes it easier for children to purchase cigarettes. The issue then is whether the use of vending machines can be supervised, which seems to be one purely of practicality. The survey to which the noble Lord, Lord Walton, referred stated that a majority of pub landlords said that they believed that it was an unworkable solution during busy hours within the pub.

Lord Naseby: What was the sample size—200 out of the whole pub trade of 120,000 pubs?

Lord Crisp: I am sure that there could be more than one sample; I believe that the noble Lord has referred to another survey, which may have produced a different result. Nevertheless, there is some evidence of pub landlords believing it to be impractical. Moreover, it feels very impractical on a common-sense level, as other noble Lords have said. The noble Lord, Lord Campbell-Savours, described something like five steps. It did not seem to me that the steps that he was describing were any shorter than those that it would have taken for somebody to sell somebody a packet of cigarettes without having to operate machinery across the room. On the basis of the impracticality of that solution for what is a significant problem for children, we should support the Government's amendment.

Lord Stoddart of Swindon: My Lords, I wish that the Government and other people would make up their mind. We have heard this afternoon that tobacco is an addictive and dangerous drug, not only to children but to everybody else. Of course, many people accept that; I accept it myself. But the Home Secretary does not. When Professor Nutt suggested that tobacco was more dangerous than cannabis, the Home Secretary sacked him. So it is quite obvious that the Home Secretary takes a different point of view from that taken by the right honourable Mr McCartney and the Secretary of State for Health.
	So where are we on tobacco? Is it so dangerous that, as Professor Nutt says, it should be made a class B or class A drug? Or is it not as dangerous as those drugs and therefore should it remain a completely unregulated substance? It is about time that we had clarity on this, although obviously we are not going to get clarity on it this afternoon. I was regularly in Grand Committee when we discussed this matter, where one decision was made virtually by unanimity, with no change in the situation made at Report. Now, however, the Government have decided to accept an amendment to their own Bill. Let us also not forget that this is a House of Lords Bill; it is not a House of Commons Bill. The House of Lords is quite entitled to insist that the Bill should be as it was when it left here. Indeed, the Government should be insisting that the Bill should be as it was then.
	If we were discussing something that involved losing 650 jobs, the closure of 200 factories, making some people bankrupt and making it difficult for 70,000 public houses at a time of rising unemployment, we would all be outraged. Yet we are proposing to do this with impunity. Of course we are being told, "That's rubbish". In every debate that we have had about tobacco—and by God I have taken part in some of those debates during my period in this House and, indeed, in the other House—we have been told, "It won't really affect businesses in the way you say it will". For example, when we were debating the ban on smoking in public places, we warned, because we had information from the industry, that many public houses throughout the country would close. Again, we were told that we were talking nonsense. Yet thousands upon thousands of pubs have closed up and down the country. If the prevention of smoking in public places did not have the whole effect, it certainly had a partial effect on an industry that was going through a difficult time.
	We have heard about an alternative this afternoon—the noble Lord, Lord Campbell-Savours, first raised it—which could possibly solve the problem for everyone. Indeed, he quite rightly said that perhaps the House of Commons was not aware of this new system that has been produced at some cost to the vending machine industry. Why would we not do this?
	I go back to the ban on smoking in public places. We spent a lot of time on it in Grand Committee, with a lot of expertise from various people. We could have prevented a complete ban by providing instead for the separation of smokers from non-smokers. The Government would not listen. They would not even consult the people who could provide the air-conditioning equipment that would have allowed the separation of smokers from non-smokers and helped the pubs industry through a difficult time.
	I go back to where I started. For heaven's sake let the Government make up their mind about where they are going on smoking. I fear that the reason why they do not want to have a complete ban on smoking—that is really what they are advocating; that is what they are after, to make it completely illegal for anybody to smoke—is that they are afraid of the electoral consequences and do not want to lose the £10 billion of revenue that they get from people still daring to smoke. Please let us have some honesty about this matter and not have the Government say on the one hand that smoking is bad for you but on the other hand that it is not as bad for you as cocaine or cannabis.

Baroness Barker: My Lords, throughout the deliberations on this Bill, as noble Lords who took part in all of them may recall, I have at times been equally uncompelled by the campaign run by ASH as by the one run by the manufacturers. At times I have found both to be somewhat overstated. I have therefore spent all the time we have deliberated on this Bill coming at every issue and briefing with considerable care and an open mind. I have been helped in that by the fact that now, as all the way through this Bill, our Benches have free votes on this matter.
	With some considerable relief I heard the noble Earl, Lord Howe, clarify precisely what the issue is today. The one of most concern is what happened in the Commons and the matter of Commons procedure. I do not wish to be flip at all, but if this House set itself the task of addressing every piece of legislation that had a defective passage through another place we would never go into recess. But I take the point that there was not a vote, because it is important. That is why I made it my business to talk to colleagues in another place to see whether Members there had been frustrated over it. My understanding is that they were not. My honourable friends in another place are usually pretty quick to tell me about something like that. The fact that there was no vote may, as the noble Lord, Lord Campbell-Savours, said, suggest a frustration of the will that House, but that is the most important point on that.
	I have listened with great care this afternoon to arguments on vending machines, some of which have been new and many of which have been rehearsed before. Throughout this debate we have missed one important point. Vending machines predate a whole load of other changes in society; they were there in "Brief Encounter", on station platforms, when everything else for miles around was closed. These days it is extremely hard to live anywhere where there is not a shop open 24 hours a day within a manageable distance, although I accept that in some country areas that may be an overstatement. Vending machines are an anachronism—a point that has been missed—so why have they continued to exist? They continue to exist for the convenience of people who smoke and because the vendors of tobacco find them an effective way in which to find the new markets that they need among young people.
	I did not agree with the display ban that was agreed in the Health Bill. I share the deep concerns of noble Lords that such a ban will lead to an increase in smuggling. I did not agree with some of the other measures that your Lordships' House agreed to. But banning vending machines, given all the arguments put before us, is the right thing to do. It is in the interests of young people and it should happen as quickly as possible. That would be my view; whether my colleagues choose to support me is a matter for them.

Lord Hughes of Woodside: My Lords, I did not intend to speak in this debate, but I am afraid that I am torn between two opposites. I speak as a self-confessed one-time tobacco addict. I hope that after 10 years of abstention, I have now kicked the habit, but I am not guaranteeing it. I accept that tobacco an addictive. I accept, in some respects, Professor Nutt, who says that it is more dangerous than cannabis or cocaine. The dilemma is, however, what we should do about it. I regret to say that some of the arguments in this House this afternoon have been, "We know tobacco's bad. We know we can't stop it, but we have to be seen to do something". The instant reaction nowadays is ban it or stop it. "Whether it works or not, who cares? Our conscience is clear. We have made our position quite clear that we want to stop it".
	If tobacco is so serious, why do the Government not have the courage of their own convictions and ban it entirely? I would accept that. I cannot accept the argument that we should not take a course of action because of the loss of jobs. Nobody says that we should allow heroin to be continually sold on our streets or for cocaine constantly to be trafficked. There would be a loss of jobs. They may be illegal jobs, but they are still jobs. To lay all that aside, in the absence of a total ban, it is not necessary simply to do a little here or there and say that it will work.
	The difficulty in this is entirely to do what is right. What is not right is for the Government to change their mind within six months and suddenly, almost by diktat, to apply a whip. If a free vote were to be allowed in the Commons, it ought to be allowed here. It is not often that I vote against the Government, but I certainly shall do this evening.

Lord Rea: My Lords, my noble friend says that tobacco should be banned, but he is mistaken if he thinks that that will reduce consumption of tobacco because it would produce a whole new class of criminal as well as probably not making any difference to the consumption of tobacco.

Lord Hughes of Woodside: Precisely the same argument can be applied to the banning of vending machines—it will produce a new class of criminal.

Lord Rea: That is a point that other people will probably not agree with, as I do not.
	One thing that we have not emphasised in this debate is that although this tobacco legislation is aimed at discouraging children from smoking, the people who will benefit most from children not smoking are the adults that they will become. It takes a generation or so for the pathological effects of smoking to appear. When a child starts early, he or she will not suffer very much at the time, but the addictive effects of smoking will last. As my noble friend Lord Walton said, 80 per cent of adult smokers start before the age of 19. That is the real point of this legislation. I confess an interest in that I voted for the full banning of vending machines in Committee. I feel that my right honourable friend Ian McCartney is absolutely right. The feeling of the House of Commons was very much on his side even though there was no vote.

Baroness Thornton: My Lords, it is clear from today's debate that protecting young people from harm caused by tobacco is a serious issue which needs to be addressed. It is one that many feel passionately about. As the noble Earl said, we do not disagree about the importance of this issue. Amendment 11 will be a major step towards tackling the serious problem of young people accessing tobacco from vending machines. I will respond to a number of the points raised during this debate.
	First, the Government's position on tobacco vending machines has indeed changed in light of the debate at Report stage of the Health Bill in another place. We admit that we have changed our minds, notwithstanding the quotes raised by the noble Lord, Lord Monson, when we considered the Bill earlier this year. It was an impassioned debate in another place, and it resulted in a key amendment being accepted. The intention of the amendment made in the other place was to remove the power to impose requirements on tobacco vending machines, thus allowing the Government only to prohibit cigarette sales from such machines or not. As the Secretary of State for Health said in another place, the will of the House will be respected when the Government consider how best to put it into effect. That is why the Government do not seek to overturn the amendment now.
	I will discuss the will of the Commons not being clear, and there not having been a Division. The noble Baroness, Lady Barker, checked with her colleagues in another place; this was indeed helpful and exactly accords with my view. The noble Lords, Lord Monson and Lord Naseby, raised this issue. As noble Lords well know, the other place determines its own rules. I thank the noble Lord, Lord Maclennan, for his comments on this. The Speaker presides over the Chamber to ensure that those rules are followed. It is not normally the Government's job to put tellers in on a free vote. The Speaker ruled on that day and Hansard records that decision. Yes, a Division was called off and the amendment was accepted on a shout. I can recall times when this House has had such procedures. Under similar circumstances, noble Lords have accepted that decision; it is considered a proper and valid decision of this House. I suspect that honourable Members in another place may take exception to their procedure being questioned in the way that it has been by noble Lords—as, indeed, we would.
	We were asked: why not allow the vending machine companies to implement restrictions on a voluntary basis before banning them? As long ago as 1998, the Smoking Kills White Paper referred to the voluntary code of practice issued by the National Association of Cigarette Machine Operators to its members. This code has been revised so that the primary consideration when siting a machine is the need to prevent sales to children. Despite the NACMO code of practice, vending machines remain a significant source of tobacco for children and young people. That is why we included vending machines in the Health Bill in the first place, and why Ministers have made it clear that action will be taken.
	The tobacco vending machine industry has had ample opportunity voluntarily to solve the problem of youngsters getting tobacco from its machines; it has been unsuccessful. Young people are still getting tobacco from vending machines. I met representatives of NACMO this morning because I wanted fully to understand the issues. I listened carefully to what they had to say. We are committed to making the regulations on the tobacco provisions of the Health Bill as soon as possible. There is nothing to be gained from undue delay. As I pointed out to the gentlemen I met this morning, the date would still be October 2011, which is nearly two years away. It would not be immediate. There is scaremongering among the people who run these companies that this is an immediate ban. This is not the case. The Government are taking the powers—

Lord Hughes of Woodside: I am grateful to my noble friend, but if the matter is so serious, and if so much damage is being done to many thousands of people, as described by the noble Lords, Lord Patel and Lord Walton, why wait two years before doing something about it?

Baroness Thornton: My Lords, we are giving businesses time to deal with the fact that these regulations will be in place, as we promised them that we would, and as I explained to the representatives this morning.

Lord Naseby: This is an important point. The Minister knows as well as I do that the Department of Health's recently published consultation on the proposed tobacco control regulations in England recommends the use of the RF system. Does the department accept that this is a good system and that it must move forward, or are Ministers totally blind to what their own department is finding?

Baroness Thornton: My Lords, we have consulted consistently with the National Association of Cigarette Machine Operators and have taken its views into account. Of course we discussed that matter with it when we were drafting the regulations that were to be considered before the other place took its decision. We are sympathetic to small businesses that will be affected by the legislation to prohibit tobacco vending machines, but we are also concerned about how easily young people can get tobacco from vending machines. When another place considered the proposals for vending machines the competing interests were debated.

Lord Stoddart of Swindon: Since the industry believes that a lot of people will go out of business, is it the Government's intention to give them compensation?

Baroness Thornton: I do not know the answer to that question and I will certainly let the noble Lord know, but in considering the proposals on vending machines, the competing interests were debated and the effects on the vending industry were discussed. The noble Lords, Lord Palmer and Lord Monson, suggested that removing vending machines would mean that more illicit tobacco would be sold in pubs and clubs. That is speculative. There is no evidence that removing vending machines will result in more illicit tobacco being sold in pubs and other venues where vending machines are commonly located. Indeed, laws are already in place to prevent premises being used for the sale of illicit tobacco and significant punishment can be imposed should that happen.

Lord Campbell-Savours: Would my noble friend—

Baroness Thornton: Can I make some progress? My noble friend Lord Campbell-Savours referred to the technology and the equipment. The use of equipment to prevent vending machines selling cigarettes to children was an option included in the Department of Health's 2008 consultation. This is not new technology. I know that the tobacco vending industry has been active in making both your Lordships and Members of another place aware of the different options that we have. Unless Members of another place were not reading their e-mails or their post, I suspect that they would have known what options were available when they had their debate. The noble Lord, Lord Stoddart—

Lord Campbell-Savours: On that matter—I want to press this—the issue is whether during the course of the debate—my noble friend recognised that it was comprehensive and detailed—consideration was given to radio-frequency-controlled cigarette vending machines. It is very simple: if it was, then we should vote for the McCartney amendment; if it was not, it seems to me that the Commons were unaware of this technology, which seems to me to deal with all the issues about which my noble friend is concerned.

Baroness Thornton: I can see why my noble friend is pushing that point but, as I said, it would be very difficult for any of us, both at this end of the building and the other, not to know what technology was available to control vending machines. I do not have the relevant Hansard in front of me but I have looked through it and I know that there was a passionate debate on both sides of the issue. I would be extremely surprised if honourable Members were not aware of the technology and equipment available to solve this problem. However, as far as I can tell from the debate, they were not convinced that this would solve the problem of tobacco being available to young people from vending machines.

Baroness Golding: Would the people in the other House, or people in general, be aware that trading standards have endorsed machines with this radio frequency control mechanism? That has been developed recently and so has only just been put in the machines; not all machines have it yet, but most machines do. Are people aware that trading standards have endorsed it?

Baroness Thornton: I have no idea whether people are aware of that. I certainly was aware that this technology had been discussed with trading standards officers, but it does not actually change the point. We are committed to making regulations relating to tobacco under the new powers provided by this Bill. Of course, careful consideration will be given to the responses to the consultation and to complying with our EU obligations to notify draft regulations. Amendment 11 was accepted in the other place and all parties were offered a free vote. This amendment represents the will of that House. Therefore, I beg that Amendment 11 and the consequential amendments be agreed to and I ask the noble Earl, Lord Howe, to withdraw his amendment.

Lord Howie of Troon: Might I draw my noble friend's attention to a procedural matter, to which she referred earlier? She will be unaware of the fact that I was, for a number of years, a Whip in another place—admittedly, that was some considerable time ago—and I can assure her that the Whips will always put in Tellers in order to protect the Government's business, whether there is a free vote or not. The one exception is if the vote is on a Private Member's Bill, where a free vote would cover the entire Bill and not an amendment.

Baroness Thornton: I stand corrected by my noble friend and thank him.

Earl Howe: My Lords, this has been a good debate and I am grateful to all noble Lords who have taken part. We have heard in particular from the noble Lords, Lord Walton and Lord Patel, about the damage that is caused to young people who are given access to cigarettes. That is not a case that I wish to argue against; I accept it, but it is not central to the matter at issue.
	It is necessary to re-emphasise only two points. There is a proportionate and workable course of action open to Parliament in pursuing its wish to bear down on underage access to vending machines. That is to allow the Government to lay regulations designed to ensure that such access does not occur, while at the same time allowing legitimate adult smokers to purchase cigarettes from vending machines as they wish. I do not show the pessimism of the noble Lord, Lord Crisp, about this. We know that there is technology available and in use that would enable that to happen. The Government believe that, too. The Minister in another place, Gillian Merron, said during the debate on the McCartney amendment:
	"The Government believe that we can place requirements on vending machines that will be effective, proportionate and deliverable in preventing under-age sales and balance the views of all concerned".—[Official Report, Commons, 12/10/09; col. 109.]
	Those of us who share that belief argue that, if government policy is to be overturned, the very least that is needed is a vote in the House of Commons. Indeed, I would argue that a vote there should be seen as necessary, irrespective of one's view on the banning of vending machines. My clear understanding is that, as the noble Lord, Lord Howie, has outlined, the other place was denied the opportunity to go through the Lobbies. I refer the noble Baroness, Lady Barker, to col. 123 of Commons Hansard on 12 October, which makes the position abundantly clear. I am sorry if the sensibilities of Members of another place may be troubled by our rejecting the McCartney amendment, but in my view the matter is too important for that.
	It is certainly true that the competing interests were debated in the other place, but from reading the debate one can see that they were barely alluded to. The main thrust of the debate focused on tobacco displays, which are not the subject of our debate. To approve the Commons amendment today, in the absence of a Commons vote, would be to betray the 650 or so people whose livelihoods depend on being able to operate vending machines. They are men and women with families and mortgages who, in many cases, stand to lose everything if cigarette vending machines are summarily banned. If that were to happen on the back of what was, essentially, a mess-up in the House of Commons, it would—

Lord Walton of Detchant: It is not a summary ban, because it is always recognised by those of us who support the ban, first, that the Government have to produce regulations, which have to go out to consultation, and, secondly, that the process is quite lengthy. That will give the people involved in the industry time to deal with matters accordingly. As the noble Baroness has said, the ban would certainly not come into effect for about two years.

Earl Howe: I am not arguing about that. I am arguing that the two-stage approach, which the Government originally favoured, was the proportionate one. If we are left with the McCartney amendment and nothing else, it will be a summary ban because it is an all-or-nothing position. That is my point. I maintain that, unless we ask the other place to think again, we will have on our hands a travesty of the parliamentary process. Without apology, I therefore beg to move.

Division on Earl Howe's Amendment
	Contents 83; Not-Contents 170.
	Earl Howe's Amendment disagreed.

Motion agreed.
	Amendment 12
	 Moved by Baroness Thornton
	12: Insert the following new Clause-
	"Private patient income of mental health foundation trusts
	(1) Section 44 of the National Health Service Act 2006 (c. 41) (private health care) is amended as follows.
	(2) In subsection (2)-
	(a) after "not greater than" insert "- (a)";
	(b) at the end insert ", or
	(b) in the case of a mental health foundation trust designated under subsection (2A), that proportion or 1.5% if greater."
	(3) After subsection (2) insert-
	(2A) An authorisation of an NHS foundation trust which was an NHS trust must designate it as a mental health foundation trust for the purposes of this section if it appears to the regulator that it provides goods or services only or mainly for the prevention, diagnosis or treatment of any disorder or disability of the mind or for the benefit in any other way of people suffering from a disorder or disability of the mind.""

Baroness Thornton: My Lords, I beg to move that the House do agree with the Commons in their Amendment 12. In doing so, I shall also speak to Commons Amendment 14.
	We had a full debate in the course of the Bill's passage about the private patient cap and its impacts on the National Health Service and I thank all noble Lords for their valuable and informed contributions to our discussion. I am pleased to say that Commons Amendment 12 responds to these debates and enables a designated mental health foundation trust to earn up to 1.5 per cent of its total income from income that it derives from private charges. The new clause also contains the definition of mental health foundation trusts for this purpose.
	NHS foundation trusts are a growing part of the NHS. The Government are committed to ensuring that the foundation trust model becomes a dominant form of healthcare provision. We want these trusts to use their freedoms, local accountability and financial independence to innovate and improve NHS services. As noble Lords know, the intention behind the cap was to manage a potential risk that the freedoms given to foundation trusts might allow them to change their fundamental nature as NHS organisations. As the foundation trust model has evolved, it has become clear that we need to examine new ways of ensuring that the foundation trust best serves the interests of NHS patients; we absolutely accept this.
	At Third Reading, I announced that the Government would embark on a policy review following the outcome of the judicial review of the current legislation. However, we have brought forward that commitment and last week commenced our review by launching a call for evidence to stakeholders both inside and outside the NHS. This is due to close by the end of the year. The Government would like to see NHS patients deriving even greater benefits from NHS foundation trusts. That is the basis of our review. This is a complex and controversial issue and only by having a fundamental and inclusive review can we ensure that consensus is reached on the solution for the long term. It will also ensure that any future solution for the long term is pragmatic, workable and achieves our fundamental purpose.
	Our call for evidence sets out the key principles towards which we are working. NHS foundation trusts must: first and above all, prioritise and protect the interests of NHS patients; secondly, ensure income from private patient work is used for the overall benefit of the NHS; thirdly, preserve and promote the principles and values of the NHS, as now enshrined in the NHS Constitution, and achieve national standards and government policy objectives; fourthly, not undertake private patient work in such a way as to result in a detriment to services for NHS patients; and, fifthly, ensure that mechanisms are put in place to secure and demonstrate that there is no cross-subsidy of private care with public money.
	This is the first stage of a broader process to review the cap. The evidence that we receive will help to shape the direction that our policy review takes next year, which we expect to complete in the spring. We intend to follow this with a public consultation on proposals for reform, which would mean that legislation could be possible early in the new Parliament.
	Pending the outcome of the review, a compelling case has been made for one narrowly defined interim measure to address the genuine anomaly of mental health foundation trusts, all of which have caps set at zero. Mental health foundation trusts were not envisaged in 2003. This amendment addresses an unintended consequence of the legislation and one of the most commonly reported complaints about the cap. Many noble Lords and honourable Members in another place have raised this issue as a particular concern. The Government have received representations from mental health foundation trusts that say that they are unable to move forward with ideas for service development. One, for example, has said that it cannot develop novel services such as those for children with autistic spectrum disorders and acquired brain injury. This type of service provision, it says, could have national application.
	As the noble Baroness, Lady Meacher, observed in Grand Committee, these trusts have told their representative body that they are also prevented from supporting the Government's well-being agenda. Some have written to us saying that they cannot enter into government-sponsored return-to-work activities with external contractors or provide specialist help for employees at risk of mental ill health, unlike non-foundation mental health trusts. Given the current climate, it has never been a more important time to invest in mental health. Mental health foundation trusts themselves have said that, for their service users, the ability to promote and deliver the well-being agenda would be very beneficial.
	We have listened and we are acting. By enabling the application of a cap of 1.5 per cent, Amendment 12 will give our highest-performing providers of NHS mental health provision more room to innovate and support the development of further high-quality services for the NHS. The calculation of 1.5 per cent does not purport to be an exact science; it is an acknowledgement that mental health foundation trusts need some freedom. The figure is based on the average cap for acute foundation trusts in 2008-09. I stress that this is an interim solution, which will not prejudice the review's aim of a lasting solution for all foundation trusts. We believe that we should only do something now that is clearly defined and around which consensus can be built. As such, the focus of the interim solution should be about only mental health foundation trusts.
	The Government's amendment offers a pragmatic solution to the immediate anomaly of mental health foundation trusts. Combined with the policy review that is under way, our approach will ensure a better, fairer, lasting system for all foundation trusts. I beg to move.
	Amendment to the Motion
	Moved by Baroness Meacher
	As an amendment to the motion that this House do agree with the Commons in their Amendment 12, to leave out "agree" and insert "disagree"."

Baroness Meacher: I shall speak also to Amendment 14A, which seeks to build upon Amendment 14, moved in the other place by the Government. Amendment 14A will provide for a 1.5 per cent private patient cap for all foundation trusts with a cap below that level. As the Minister eloquently explained, the Government have accepted the need for a 1.5 per cent cap for mental health trusts. It is very difficult to see any logic in not extending that cap to all other foundation trusts.
	I should draw your Lordships' attention to misprints in the amendment on the Marshalled List. A correction slip has been issued to clarify these points and we shall debate the amendment as on the amendment slip.
	As the Minister explained, the Government accepted the principle implied by our amendment, moved during the passage of the Bill, that there should be more rationality in the system of private patient caps and that it should be possible for foundation trusts to raise at least a little more revenue for the pressing needs of NHS patients. The significance of these matters is increasingly apparent as the results of the credit crunch and the pressure on resources in the public sector, particularly the NHS, become apparent.
	I applaud the Government's decision to institute a review of the private patient cap structure, and I particularly like the principles that the Minister set out to guide that review. The aim of the review, which is taking place immediately, is to inform a policy review that will start in the new year. The only problem with this, which the Government accept, is that they will be unable to do anything about the results of the review or introduce legislation before a general election. Therefore, foundation trusts will have to stagger on with this rather ludicrous structure of private patient caps—some with 0.3 per cent, one with 30 per cent and others with 5 per cent—for the indefinite future. It is difficult to argue that that makes any sense.
	I welcome, of course, the Government's amendment agreed in the other place to give mental health trusts a private patient cap of 1.5 per cent. That amendment means that mental health foundation trusts will be able to deliver additional services and, as the Minister said, employment support to benefit NHS patients. It is a good example that the cap enables positive things to be done by trusts, not only the straightforward provision of beds for private patients one might imagine. It is not like that; this issue covers all sorts of eventualities.
	However, I should emphasise that my purpose in moving amendments on the private patient cap has never been motivated by the needs of mental health trusts, particularly, and certainly not by the needs of the East London NHS Foundation Trust, which I chair. I put on record that that trust has no plans at present to undertake private patient work, although that would now be possible.
	The Foundation Trust Network has asked foundation trusts to indicate what a 1.5 per cent patient cap would mean in terms of additional revenue. It is interesting that an additional £132 million would be brought into the 55 trusts which responded for the benefit of NHS patients. It is useful to think about that funding in terms of saving jobs in the NHS. If we assume a cost of £40,000 per job, a 1.5 per cent cap for all foundation trusts could save about 7,000 jobs. It may be that a few mental health trusts will not take up the cap—in which case 7,000 would be a slight overestimate—but that would not make a huge difference. I raise the employment point because it relates to UNISON's concerns about any change to the private patient cap, and it may be particularly interested in the idea of saving 7,000 jobs per year in the NHS in the coming period.
	The other benefit of the amendment is that, for the first time, there would be a level playing field for some 75 per cent of foundation trusts. The remaining 25 per cent would have a cap above that level going back to 2002-03. That will have to be settled after the general election, when and if a new Government get round to dealing with these issues.
	During the passage of the Bill, we discussed a number of the disadvantages of the uneven and very restrictive private patient cap. I do not wish to repeat those debates except to briefly summarise a few of these problems. The Government's top-up policy is unworkable in foundation trusts without reform. The private patient cap makes it hard for some leading NHS providers to become foundation trusts. A mental health foundation wanted to buy out a private-sector competitor that was going out of business and whose services were, presumably, needed and could have been taken into the NHS. However, because there was no cap—although 1.5 per cent would not have covered it—that sort of initiative was simply not viable.
	Private patient income was the means by which one foundation trust bought leading-edge technology and equipment for the benefit of NHS as well as private patients. More trusts need that option, and that is going to be more and more pressing. The private patient income cap is threatening the development of cancer services to both NHS and other patients. Investment in laser dermatology for the benefit of NHS and private patients is being prevented by the current private patient cap.
	In the tight financial climate of the coming years, these restrictions on NHS services for NHS patients will only worsen. I hope the Minister will agree that this modest amendment would assist trusts to some extent while the nation waits for the results of the review and new legislation. I hope she will agree that it deserves the Government's support. I beg to move.

Earl Howe: My Lords, the world has moved on considerably since we last debated these matters in your Lordships' House in May. When the Lords amendment was passed at Third Reading, the Government were not prepared to countenance a variation of the current rules on the private patient income cap because a judicial review about the operation of the cap was underway in the courts. Not only have the Government now changed their mind on that point and decided that there is no issue of principle at stake here, they have also felt able, of their own volition, to make a concession in respect of mental health trusts, as we now see in the Commons amendment before us—a concession I naturally welcome.
	It is instructive to read the remarks of the Minister in another place, Mr Mike O'Brien, who said on Report on 12 October:
	"We take the view that the way the system operates now is not the way we want to see it operate. It is not fair. We concede that argument immediately".—[Official Report, Commons, 12/10/09; col. 70.]
	Referring to the honourable Member for Eddisbury, he said:
	"He asks whether we have changed our mind: yes, we have. Have we considered the matter again? Yes. Have we taken the view that we can go ahead with the change now? Yes, we have".—[Official Report, Commons, 12/10/09; col. 77.]
	We are now in a strange situation. There is no issue of principle at stake any more. The Government agree that the system is not fair and needs revision; they admit they have changed their minds and accept that the system can be changed now. If all that is true, there is absolutely no argument for resisting the amendment of the noble Baroness, Lady Meacher.
	The amendment does its level best to defer to the Government by not asking for too much. In all honesty, the figure of 1.5 per cent which the Government have alighted upon as a concession to mental health trusts is completely arbitrary. One could argue that it simply perpetuates the arbitrary nature of the entire private patient income cap regime. There is absolutely no logic to the figure of 1.5 per cent, but it is the percentage that the Government now feel comfortable with. As an interim measure, this is certainly better than nothing. The noble Baroness, Lady Meacher is to be commended for advancing a proposal which is both moderate and reasonable. I find it difficult to imagine what rational argument the Minister can put up against it.
	At Third Reading, the noble Lord, Lord Warner, focused on one aspect of this issue which we would all do well to bear in mind:
	"We are moving into a financial climate where the NHS ...will need every penny that it can get to meet public expectations".—[Official Report, 12/5/09; col. 936.]
	The noble Lord was absolutely right. The problem with doing things as the Minister suggests is that if we let this Bill go without inserting this amendment into it, it is likely to be a long time before another legislative opportunity comes before us. As the noble Baroness said, it is likely to be 2011 at the earliest before Parliament is able to revisit this matter. That is not acceptable. More to the point, the Government should not regard it as acceptable given that they now agree that the current rules cannot remain in place.
	The Government have announced a rapid review of the private patient income cap and have issued a paper calling for evidence about it from the NHS. This review is unlikely to bring much to the table because the Government already know the system needs to change pretty radically. A key point is the need to provide foundation trusts with a breathing space, which is just what this amendment would do. Some 75 per cent of existing foundation trusts have a private patient income cap of less than 1.5 per cent. A lot of trusts are not being permitted to meet the needs of their NHS patients as fully as they would like to do by investing in new services, trusts whose NHS budgets are stretched to breaking point because they are barred from generating any additional private patient income whatever.
	The perversity of the situation is well exemplified by Great Ormond Street children's hospital, which cannot apply for foundation status because if it did so it would be instantly in breach of its cap. It carries on as it is, with no restriction whatever on the amount of private patient income it can generate. Is that really what we all want?
	Even at this late stage, it is not too late for the Government to change their mind yet again. I hope they will do so by accepting the amendment of the noble Baroness. I shall not hesitate to follow her should she choose to test the opinion of the House.

Lord Warner: My Lords, I rise to support the amendment of the noble Baroness, Lady Meacher, to the Commons amendment. I do so as the Minister who took through this House the 2003 legislation setting up foundation trusts and imposing what I can only describe as the arbitrary private patient cap. Later I was also the Minister responsible for policy on foundation trusts but have no current public or private interest to declare in speaking to this amendment.
	I recognised at an earlier stage of this Bill that we had got the 2003 Act wrong on the private patient cap. I am pleased that my colleague, Mike O'Brien, in the other place appears to have had a Pauline conversion since our discussions at Third Reading here. We also know that lurking in the background is the attitude toward private patient income and the private patient cap of UNISON and other public sector unions. They have rather forgotten that the patron saint of the NHS, St Nye of Ebbw Vale, himself wrote into the NHS founding legislation provision for trusts to obtain private patient income and indeed for NHS patients to secure more privacy by buying a space in amenity beds. There is a long tradition of using private patient income in the NHS for the benefit of NHS patients and the development of services.
	We now have a situation where some FTs have a cap of 30 per cent, some of five per cent and some zero per cent. I welcome the fact that in the other place the Government have improved the situation in relation to mental health trusts. However, this still leaves some 75 per cent of foundation trusts below that cap, according to the excellent piece of work circulated to Members of this House by the Foundation Trust Network. I find it extremely disappointing that, for reasons of their own, the Government are unwilling to apply the 1.5 per cent ceiling consistently across foundation trusts.
	The Foundation Trust Network's excellent briefing sets out some of the missed opportunities presented by these new, equally arbitrary, arrangements from the Government, both for foundation trusts and for NHS patients. As that briefing paper illustrates, the Government's position is a bit of an own goal in that it thwarts its own policies on well-being and top-up of NHS services.
	The amendment of the noble Baroness, Lady Meacher, is a moderate attempt to introduce greater coherence into the capping of FT private patient income while also protecting the interests of NHS patients. It also gives foundation trusts a good slug of additional income. I would suggest, on the Foundation Trust Network's calculations, something of the order of £200 million a year in extra income, which buys quite a lot of extra services for people. As the noble Baroness, Lady Meacher, mentioned, it creates extra jobs at a time of difficulty in and around public finances.
	I would be a bit more convinced about the Government's review if the Department of Health had supported Monitor rather more vigorously over the judicial review sought by UNISON. I was concerned to find that recently, the Department of Health, acting as an "interested" party in that judicial review, is giving evidence to the High Court supporting an even more restricted position than Monitor is in now. I do not think that that bodes terribly well for an objective review of our private patient income cap. I am sorry to be sceptical but I operate on the basis of the evidence in front of me, and I do not find that terribly convincing.
	If they had wanted to, the Government could have dealt with this legal challenge differently by acknowledging that there were problems and by setting out their plans to deal with the arbitrary and inconsistent nature of the 2003 cap. This rather last-minute call for evidence does not totally convince me. It could have been done a long time ago and the case could have been made in plenty of time for an amendment to this Bill or earlier legislation. The amendment moved by the noble Baroness, Lady Meacher, is a practical way to improve matters while the Government make up their mind about what they want to do. I am not at all clear from the call for evidence what they want to do in this area, apart from setting out some principles with which most people would find it difficult to disagree. The amendment moved by the noble Baroness, Lady Meacher, does good for NHS patients and FTs alike and, in a modest way, helps implementation of government policy. If she wishes to press her amendment to a Division, I shall certainly join her in the Lobby, and I encourage my noble friends to do likewise.

Lord Walton of Detchant: My Lords, I shall be brief, because I think that this is an excellent amendment which is well worthy of support. I could not resist intervening when I heard the noble Lord, Lord Warner, say that there is a long history of the NHS taking private patients and deriving from them income that has supported the National Health Service. When I became a consultant in neurology in 1958, that was perfectly true. For a time, I did part-time private practice and was able to admit private patients to the ward in my hospital. The income derived from them was substantial. Subsequently, however, I became a whole-time academic and could no longer have private patients in my ward.
	I think that the memory of the noble Lord, Lord Warner, is rather short. He may not remember that when Mrs Castle, as she was before she became Baroness Castle, was Secretary of State for Health, under pressure from the unions, a major campaign was undertaken to remove, as far as possible, all private beds from NHS hospitals. It reached a stage when there were three major hospitals in Newcastle-upon-Tyne and only one private bed was available in each hospital. I, as an academic, used to receive patients referred to me from countries across the globe—even from the United States and Australia—but I had to refuse to take them because there was not a private bed to which they could be admitted. That policy of the then Labour Government, under pressure from the trade unions, gave the biggest impetus to the development of private hospitals outside the NHS of any policy adopted by any Government.
	I strongly favour the public-private mix. I strongly favour the proposal that private patient income should be used to the benefit of the National Health Service. I believe that the amendment tabled by my noble friend Lady Meacher goes a long way in that direction. Personally, I would have loved to see the cap greatly increased, but I know full well that Unison would not accept it at the moment. However, I hope that the consultation on which the Minister is now engaged, and in which the Government seek to take advice, will lead to a substantial modification of the cap in the long-term.
	In the mean time, as my noble friend Lady Meacher has made clear, the income derived from private patients is at the moment of benefit to foundation trusts. For that reason, her amendment, modest although it is, is a crucial development. Whatever the consultation shows, no legislation further to amend the cap is likely to come about for several years to come. I strongly support the amendment.

Lord Campbell-Savours: My noble friend Lord Warner said that in 1983, the Government got it wrong.

Lord Warner: It was 2003.

Lord Campbell-Savours: I am sorry, in 2003. I am sorry to take issue with my noble friend, but the Government got it right. The reason they got it right was that it was on that basis—the undertakings given to Parliament on this matter—that the Government got foundation status through the House of Commons. Without those undertakings on this matter, there would be no foundation trusts in the United Kingdom today. What happened then should be clearly in the minds of those who want to amend the legislation in the way suggested .
	I have to say delicately that in tabling her amendment, the noble Baroness astonished me. I well recall her comments at Third Reading. Perhaps I may read them out to refresh her memory. She had been pressing for further consideration to be given to these matters. She spoke at length—as did we all—and gave a memorable speech, which we all recall with great interest. In response to that speech, my noble friend said:
	"it is our intention to begin a review to address precisely how to strike the right balance between protecting NHS services for NHS patients and allowing NHS foundation trusts the flexibility they need to operate effectively in the best interests of patients. This would mean a review of the cap and appropriate action to follow ... I repeat our commitment to take forward a review following the outcome of the current judicial review. This is the most sensible way of making sure that any new approach reflects the views of those affected and enables us to test those practical solutions".
	So the Government were conceding to the noble Baroness, Lady Meacher. In response to that generous offer from the Government, she said:
	"When the Government are able to institute a review, we would all hope to be involved in it, contribute to it and support it. Then, if possible, a consensus can be found through a good consultation process in which all the issues can be resolved, and a set of principles wider than we are able to deal with today can be put into a future Bill".—[Official Report, 12/5/09; col. 939-40.]
	In other words, she fully supported the review that my noble friend was offering at Third Reading. It is no longer a question of the review being in the future, it is now in the past. The decision has been taken and the review is in place.

Baroness Meacher: My Lords, I intervene only to say that I still agree with every word that I said at the time. On all sides of the House, we recognise that this is an interim measure. We still have 25 per cent of foundation trusts with variegated private patient caps. Clearly, that is not sensible or useful. Ultimately, 1.5 per cent may not be the right figure, but I think that there is a general understanding across the country that the present completely illogical and inconsistent private patient cap is unhelpful for all concerned. This modest amendment is an attempt to improve matters in the interim, pending the result of the review and, no doubt, ultimate legislation in a few years' time.

Lord Campbell-Savours: The noble Baroness says that this is an interim measure. I argue that the interim measure is the concession on mental health trusts. My noble friend is breaching the wider principle of extending the amendment to the cap right across all National Health Service foundation trusts in the United Kingdom. I choose my words delicately, but she is making a mockery of her acceptance of the very generous offer that my noble friend made at Third Reading. I have argued repeatedly in the past that this is a sensitive matter for the Commons. In the event that these matters are to be dealt with, they should be dealt with in primary legislation in the House of Commons in a Bill that goes through all its stages in the House of Commons, not be dropped in at the last moment at the fag end of a Bill, which effectively gives the House of Commons only one opportunity to debate it. The House of Commons is being denied the right comprehensively to consider this very sensitive issue. I reject this amendment, and I hope the House does too.

Baroness Cumberlege: My Lords, I remember the tremendous struggle six years ago to get the principles of foundation trusts through in the legislation. There is nothing that so warms the heart than the sinner who repents, and I think we give the noble Lord, Lord Warner, absolute absolution because so much has happened in six years. We now have Monitor, terms of authorisation, the mandatory services schedule, contract variations with PCTs, boards of governors on significant decisions, asset disposal locks and consultation. There is now a framework to ensure that the NHS acts appropriately. I can understand the feelings of the noble Lord, Lord Campbell-Savours, but, with a very strong socialist philosophy, one wants to be careful to retain the fairness, the equity and all the things that the NHS stands for. I want to persuade him that in the six years that have elapsed since foundation trusts were established, we have enabled the NHS to do that through the measures I mentioned.
	I find the logic of this very hard to grasp. Perhaps I am being cynical, but I remember from when I was on the Front Bench that when you are in a hole, you instigate a review. If you have a general election coming up, it is an even better thing to do if you have a policy that is unpopular with your colleagues, your Back Benchers and the trade unions. What is being proposed by the noble Baroness, Lady Meacher, is sensible, logical and fair. It is interim in that 1.5 per cent is arbitrary, but at least we are getting to a greater degree of parity, which the NHS needs. I am working with the NHS a lot at the moment, and there is real concern about the financial situation it is facing. If this brings more money into the National Health Service, we should welcome it.

Baroness Barker: One thing that has not changed in the past six years is that the best children's hospital in Europe, if not the world, is not a foundation trust. That is not insignificant because part of the problem with this debate is that it is wholly out of context. The noble Lord, Lord Campbell-Savours, tried to allude to the complex discussions around the establishment of foundation trusts. What he did not say, although it is right, is that at that time the ability to do private patient work was one of many inducements to make trusts become foundation trusts. In totality, people began to baulk at the extent to which the Government's policy of foundation trusts was being introduced.
	The noble Baroness, Lady Meacher, is to be commended for taking something that is arbitrary and inconsistent and replacing it with something that is arbitrary but consistent. That provides the answer as to why this can be only a temporary measure. It is not principled—I do not think the noble Baroness makes any claim that it is principled—nor is it worked out on the basis of any kind of sustainability. It is just an interim fix to enable some foundation trusts to generate more income. Are we prepared to put up with that in the context? With some reluctance, I think I am.
	I am not persuaded by some of the arguments that have been made about foundation trusts and their need to generate income. I would be more compelled by them if that argument applied to all NHS trusts. The key part of this amendment is subsection (2A) which states that any powers to raise money from private patient income,
	"must be exercised subject to the principle that the provision of goods and services in return for private charges must in all circumstances be in the interests of the National Health Service".
	That is what is important. Whether this amendment will achieve what in practice has been difficult to achieve, and sometimes impossible to achieve, since 1948, I am not sure. That is why there is a case for having a thoroughgoing review of this matter. I have no doubt that an incoming Government of whatever hue will not leave this one alone. I am not given to betting, but if I were, I would suggest that in three years' time, there will be a completely different proposal before your Lordships' House. However, as a very interim measure, I am prepared to accept, albeit with some reluctance, the argument put by the noble Baroness, Lady Meacher.

Baroness Thornton: My Lords, the debate today has shown that this area remains complex. There are a multitude of valuable views and principles that must be balanced. Amendment 14A, tabled by the noble Baroness, Lady Meacher, seeks to raise the level of cap for all foundation trusts to at least 1.5 per cent and introduces a safeguard that private patient activity must in all circumstances be in the interests of the health service. The noble Baroness and I agree that there is a clear case for reform, and I admire the fervour with which she has put her case throughout several debates on this issue. We differ on the means of achieving that aim.
	The government amendment seeks to provide an interim flexibility for a tightly defined class of foundation trusts that find themselves in a unique position. They as a class are unable to undertake any innovative work or private work or provide any additional private drugs and are prevented from supporting the Government's well-being agenda. This temporary measure will provide flexibility for these trusts while a full review of the cap is undertaken for all foundation trusts. We have already begun this process with a call for evidence to the NHS and other stakeholders, and we expect to complete the review process by spring. The noble Baroness illustrated the need for a thoroughgoing review. The reason we have not gone further in our amendment is that the risk of unintended consequences is significant and the advantages of developing a solution using the expertise within the NHS are compelling. We do not want to end up once again in our current position with a judicial review on the interpretation of rules ongoing at the same time as the rules are in need of reform.
	I also regret to say that this amendment presents serious technical difficulties that we would not want to see in law. The noble Baroness's amendment attempts to introduce a safeguard that, on the face of it, we could all agree with. However, the safeguard also serves to show how difficult this area is. It requires that the private patient activity must in all circumstances be in the interests of the National Health Service. Wording of this type currently exists in legislation and could be a useful guiding principle when considering reform of the cap. However, in this instance, it is legally problematic for three reasons.
	First, a foundation trust is already required by its authorisation to abide by its principal purpose of providing goods and services for the purpose of the health service in England. This is a different test from that proposed by the noble Baroness, Lady Meacher, and it is not clear what Monitor would be expected to do to give effect to the principle as expressed in the noble Baroness's amendment in addition to the existing requirement.
	Secondly, the phrase "in the interests of the health service" is currently used only where legislation needs to be deliberately vague. The issue we are debating here is not one of those cases, and the lack of clarity means that the amendment fails to achieve the protection that the noble Baroness desires. The "interests of the National Health Service" is open to several interpretations. Noble Lords can conceive of an argument that it is in the interests of the National Health Service to prioritise private patients to attract talent for a wider benefit, whereas another interpretation might be that prioritising private patients to the detriment of NHS patients is not ever in the interests of the National Health Service.
	Thirdly, the use of the phrase "National Health Service," rather than the established legal term "health service", introduces uncertainty as to whether the amendment is aimed at the interests of the health service in England and Wales, just England, or those of the National Health Service in Scotland or health services in Northern Ireland. The amendment would create legal uncertainty in an area that has already attracted litigation. It is precisely what the Government's review process aims to avoid. By conducting a thorough review, the Government hope to avoid such complications and present to Parliament a solution that could secure a sensible future for our foundation trusts once and for all—a future that gives them freedom to innovate for the benefit of NHS patients within clearly defined rules that ensure that their fundamental public service nature remains unchanged.
	Perhaps I may turn to some of the questions asked by noble Lords. The noble Earl, Lord Howe, said that the 5.1 per cent is arbitrary. That number is based on the average cap—

Earl Howe: I am grateful to the Minister. I think she meant 1.5 per cent rather than 5.1 per cent.

Baroness Thornton: I did mean a 1.5 per cent average cap on all acute foundation trusts in 2008-2009. There is a difference between giving mental health foundation trusts some flexibility where they have none, and changing the basis of the cap for all foundation trusts. There would need to be a proper review before making any wholesale change. This needs to be worked out with the NHS.
	The noble Earl said there was no issue of principle at stake any more. The principle of this is that wide-ranging change should take place with full consultation and consideration of the complex details, particularly given the divergence of strong views on this matter.
	My noble friend Lord Warner said that the concession did not deal with the arbitrary caps for acute foundation trusts. When MPs and Peers voted through the proposals in 2003, they knew that the cap would vary in an arbitrary way among acute foundation trusts. Mental Health foundation trusts were not conceived of in 2003, and are a clear exception. Change more widely than this should be based on wide consultation and debate.
	My noble friend also raised the Government's position on judicial review. The Government's position has to be founded on the formulation of the current law. We cannot advocate a flexible interpretation if it is not consistent with the legislation that exists at the moment. The issue under discussion today is how best to fix this for the future.
	In conducting our review of the cap, we are already seeking evidence widely from the NHS and others. We are committed to involving stakeholders at every step of our policy development, and the development of this concession was no different. It was developed through consultation with the parties concerned, including the trade unions.
	The noble Baroness, Lady Cumberlege, raised the issue of new developments such as Monitor and things being different now from the way they were in 2003. The same legislation that established foundation trusts also established Monitor, governors, terms of authorisation and all the other developments that the noble Baroness cites and supports so well.

Baroness Cumberlege: Does the noble Baroness agree that they had not actually been put into practice, so we did not know the results that would come from that legislation?

Baroness Thornton: The noble Baroness makes a very good point. It is exactly why we need a thoroughgoing review.
	The Government have already begun their review of this policy and are committed to reform. The amendment seeks to address a genuine anomaly while recognising that the risk of unintended consequences is such that further change must be made only on the most informed of bases and be developed with the NHS. It is important to repeat that this is a technically flawed amendment. The noble Baroness, Lady Meacher, and I share the same goal, and indeed it is shared by many noble Lords. I hope that the House will agree that the Government's way forward presents the best opportunity to secure a viable, long-term solution for foundation trusts. On that basis, I respectfully ask the noble Baroness to withdraw her amendment.

Baroness Meacher: My Lords, I thank the Minister for her reply. She is in a difficult position in arguing the case for a 1.5 per cent cap for a certain category of trust but not for anyone else, but she made a noble effort to do so. However, I take issue with the technical matter she raised. I am assured that a small technical point of that kind can be rectified perfectly well. As the Minister knows, I strongly agree with her that the review is important and I have already welcomed it. I hope that it will lead, in some years' time, to a fully worked through reform of the private patient cap.
	In the mean time, I thank noble Lords for their contributions to the debate, in particular the noble Lord, Lord Walton, and the noble Baroness Cumberlege, and of course I thank the noble Earl, Lord Howe, for his eloquent words. I thank the noble Lord, Lord Warner, for his straight talking, and the noble Baroness, Lady Barker, for her reasoned arguments. I thank the noble Baroness in particular because I know that this is a tricky issue for her, so her words were warmly received.

Baroness Fookes: Does the noble Baroness wish to test the opinion of the House?

Baroness Meacher: My Lords, I wish to test the opinion of the House.

Division on Amendment to the Motion
	Contents 85; Not-Contents 131.
	Amendment to Motion 12 disagreed.

Motion agreed.

Baroness Fookes: Before I call the next amendment, I have to inform the House that in the Division on Amendment 11, there voted Contents 83, and not 82, as announced.

Baroness Cumberlege: My Lords, I am very conscious that when I spoke in the previous debate, I did not fully declare my interest. I said that I work for the NHS, but I believe that I should have said that I run my company, which is called Cumberlege Connections.
	Motion on Amendment 13
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendment 13.

Baroness Thornton: My Lords, I beg to move that the House do agree with the Commons in their Amendments 13, 15 and 25. The proposed amendments seek to correct a mistake that has recently come to light and which was made in the Health Act 2006 and which has been consolidated into the National Health Service Act 2006. Commons Amendments 13 and 25 repeal Section 180(2)(c) of the National Health Service Act 2006 while Commons Amendment 15 provides for the new clause set out in Amendment 13 to come into force at the end of a period of two months beginning on the day that this Bill receives Royal Assent and becomes an Act.
	Since the introduction of the optical voucher scheme in 1986, government policy relating to the vouchers has been consistent across Administrations. The policy has been that eligibility for NHS optical vouchers should be targeted at children and those in receipt of qualifying income related benefits or who need a complex appliance. People aged 60 or over are currently included among those who may be eligible for help on low income grounds or who may need a complex appliance. However, the change introduced by the National Health Service Act 2006 extended eligibility for optical vouchers by mistake to all people aged 60 or over regardless of income. The records show that it was not referred to in the Explanatory Notes, was not discussed during the passage of the Bill through Parliament, and was not the subject of impact assessment or consultation. It was quite simply a mistake made during the process of preparing the draft Bill. Ministers have apologised to the Commons for this mistake and I apologise to noble Lords also. The proposed amendments seek to correct the mistake and reinstate the legislation to reflect what has been a longstanding policy of the Government and what was our intention at the time; namely, that the entitlement should remain unchanged.
	We remain of the view that help with the cost of optical appliances through the NHS voucher scheme should be targeted on those most in need, as this represents the best use of NHS funds. We recognise that people aged 60 or over have an increased risk of eye disease, and because of this, those aged 60 or over are eligible for NHS-funded sight tests. This entitlement continues and is unaffected by the proposed amendment. I beg to move.
	Motion agreed.
	Motion on Amendment 14
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendment 14.

Baroness Thornton: I spoke to this amendment with Amendment 12. I beg to move.
	Amendment to the Motion
	 Tabled by Baroness Meacher
	14A: Insert the following new Clause-
	"Private health care
	(1) Section 44 (private health care) of the National Health Service Act 2006 (c. 41) is amendment as follows.
	(2) In subsection (2)-
	(a) after "is not greater than" insert "- (a)";
	(b) at end insert "or
	(b) 1.5% of the total income of the NHS foundation trust,
	whichever is the greater."
	(3) After subsection (2) insert-
	(2A) The power conferred by subsection (1) must be exercised subject to the principle that the provision of goods and services in return for private charges must in all circumstances be in the interests of the National Health Service."
	Not moved.
	Motion agreed.
	Motion on Amendment 15
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendment 15.

Baroness Thornton: My Lords, I spoke to this amendment with Amendment 13. I beg to move.
	Motion agreed.
	Motion on Amendment 16
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendment 16.

Baroness Thornton: My Lords, this is the privilege amendment.
	Motion agreed.
	Motion on Amendments 17 to 25.
	 Moved by Baroness Thornton
	That the House do agree with the Commons in their Amendments 17 to 25.
	Motion agreed.

Energy: National Policy Statements
	 — 
	Statement

Lord Hunt of Kings Heath: My Lords, with the leave of the House, I shall repeat a Statement about the energy national policy statements and our proposals on clean coal.
	"In the summer, we published the low-carbon transition plan, which explained how we would meet our commitments to carbon reduction for 2020 and beyond. New infrastructure is being provided for the coming years, with 20 gigawatts under construction or consented—more than that which will close by 2018. However, to meet our low-carbon energy challenge, and due to the intermittency of wind, we will need significantly more generating capacity in the longer term. Over the next 15 years to 2025, one-third of that larger future generating capacity must be consented and built. Given this challenge, the imperative of reform in the planning system is clear.
	The current system is characterised by duplication, with several bodies responsible for different aspects of consent, overlapping responsibilities of politicians and independent decision-makers, and delay. Today, to guide the decision-making of the new Infrastructure Planning Commission, we are setting out for consultation six draft policy statements on energy, most importantly those for the trinity of fuels of our low-carbon future: renewables, nuclear and clean fossil fuels. We need them all in the long term because the challenge of the low-carbon transition is so significant.
	We need renewables: they are a home-grown and plentiful source of supply, already powering 2 million homes in the UK. Nuclear is a proven, reliable source of low-carbon energy and an important base load in the system. Fossil fuels, with carbon capture and storage, will enable flexible peak load response. Last year we saw offshore wind generation increase by two-thirds and onshore wind generation by one-quarter, but we need to significantly increase the rate of progress to meet our objective of 30 per cent of our electricity coming from renewables by 2020.
	The national policy statement on renewables covers onshore renewables over 50 megawatts and offshore wind over 100 megawatts. Other onshore decisions remain with local authorities. The policy statement seeks to strike the right balance between achieving national objectives and avoiding adverse impacts on the local environment and biodiversity. While the Government set out the framework in the national policy statements, each application will be decided on by the independent IPC. The IPC will have to take account of regional and local plans, drawn up by local authorities, and developers will have to ensure that they have consulted locally before any application is made, with local authorities submitting local impact reports. The Infrastructure Planning Commission will make its decisions on the basis of a clear timetable of a year from the acceptance of an application to a decision. This system is right for energy security—by meeting our commitments on renewables, we can limit the need for gas imports, holding them at 2010 levels for the rest of the decade. It is also the right thing to do for our environment, because there is no bigger threat to our countryside than climate change.
	Even on our ambitious targets for renewables, however, there will be a need, on the estimates that we are publishing today, for additional non-renewable power—we need to use all available low-carbon sources. That is why we were right last year to end the moratorium on new nuclear in this country. In response, energy companies have announced intentions to build 16 gigawatts of new nuclear power.
	In the spring, we invited comments on the 11 sites that had been nominated for new nuclear power stations, all on or near existing nuclear sites. I can tell the House that 10 of the 11 sites have been judged as potentially suitable and included in the draft policy statement. The next step will be consultation in the 10 selected sites as well as nationally. The consultation proposes that the 11th site, Dungeness, should not be included in this national policy statement. This is because the Government do not believe, following advice from Natural England and others, that a new nuclear power station can be built there without causing an adverse effect on the integrity of the internationally unique ecosystem.
	Under the habitats directive, we are obliged to consider alternative nuclear sites. An independent study has suggested that three—Kingsnorth, Druridge Bay and Owston Ferry—are 'worthy of further consideration'. We have concluded, however, that all of them have serious impediments and none is credible for deployment by the end of 2025, the period of the policy statement; nor do we believe that they are necessary for our plans for new nuclear. Therefore, we have excluded all of them from being potential sites in the draft policy statement.
	On waste management, the Government are satisfied that, on the basis of the science and international experience, effective arrangements to manage and dispose of the waste from new nuclear power stations can be put in place. In addition, today we are opening consultation on the proposed regulatory justification for two different reactor designs. New nuclear is right for energy security and climate change and will be good for jobs, too, creating up to 9,000 jobs to build and operate power stations at each site and helping leading companies to access the international market.
	As well as renewables and nuclear, the third part of our low-carbon future is clean fossil fuels. There is no solution to the problem of climate change either at home or abroad without a solution to the problem of coal—cheap and reliable, but the most polluting fuel. Already from the European budget, €180 million has provisionally been offered to assist Hatfield power station to fit CCS. I can confirm that we have received bids from E.ON and Scottish Power for the next stage of the current CCS competition for a post-combustion power station.
	Early next year, we will allocate the up to £90 million set aside for the next bid or bids that will go forward to the detailed design and engineering stage. Our aim is for carbon capture and storage to be ready to be deployed 100 per cent on all new coal-fired power stations by 2020. We are determined to ensure that, with the right combination of regulation and incentives, we make this happen. So I can confirm that, under our new framework published today, there will be no new coal-fired power stations without CCS.
	With immediate effect, to gain development consent all new coal plant will have to show that it will demonstrate CCS from the outset on around 400 megawatts of total output. Our plans are based on up to four projects between now and 2020, including up to two post-combustion projects and up to two pre-combustion projects. The pre-combustion demonstration projects are expected to have 100 per cent CCS on their coal capacity from day one. The post-combustion projects will be expected to retrofit CCS to 100 per cent of their capacity within five years of 2020, enforced by the Environment Agency, with a review to confirm this by 2018. If we conclude at that time that CCS will not be proven, we believe that further regulatory measures will be required to restrict emissions from these plants, such as an emissions performance standard.
	Even with the right regulation, though, if we leave the funding of CCS simply to private companies, it will not happen in time. To make CCS financially viable, our proposed energy Bill contains powers to introduce the levy announced in the Budget by the Chancellor to support demonstration. Responding to points made in the consultation, the levy will also be available to support the move to 100 per cent retrofit of CCS. Taken together, these policies are the most environmentally ambitious set of coal conditions of any country in the world and they provide the opportunity for Britain to create thousands of jobs in carbon capture and storage throughout our country.
	On coal, nuclear and renewables, the aim of the NPS is clear: consistent with the advice of the Committee on Climate Change, we need to be on course for the long-term goal of near-zero carbon emissions from power. Alongside the overall policy statement and those for nuclear, renewables, fossil fuels and gas storage, we are also publishing the policy statement for electricity networks. Together, these documents represent a framework for the future of our energy supplies.
	In every area—onshore and offshore wind and other renewables, nuclear and clean fossil fuels—there will be people who wish to oppose specific planning applications. Their voice must be heard in the process. The planning process must ensure that we consent the right projects in the right sites. But while, of course, we need a process that can turn down specific applications, saying no everywhere would not be in the national interest. As a country, we need nuclear, renewables and clean coal for our energy future. They are necessary for security of supply, tackling climate change and the future of our economy. That is why we are reforming the planning system and publishing our statements today. I urge all sides of the House to unite behind these proposals and I commend this Statement to the House".

Baroness Wilcox: My Lords, I thank the Minister for repeating the Statement with such startling enthusiasm when what we have just heard is the declaration of a national emergency for our energy security. The question that the Minister should answer is: why did this Labour Government leave it so late to act?
	The Statement is made necessary by the Government's admission in July that they expect power cuts in 2017. The cause of this national emergency is obvious: for over 12 years, 15 successive Energy Ministers—a new one every nine months— behaved like the ostrich and stuck their head in the sand rather than face up to the action that was needed to address our energy black hole. Did the Government know that most of our nuclear power stations would reach the end of their planned life before 2017? Was anyone in this Administration informed that North Sea oil and gas production would peak and fall away? Did anyone tell the Government that our most polluting coal-fired power stations were about to close? Every one of the measures contained in this Statement should have been brought forward 10 years ago when the Government had their chance to secure the investments that are so desperately needed to keep the lights on, keep prices down and cut carbon emissions. Why leave it so late?
	On the planning statements themselves, we support the Government. We agree that it is right to create a fast-track planning process for large infrastructure projects, with a dedicated secretariat and time-limited decisions. Does the Minister agree, however, that the final decision should be taken not by an unelected, unaccountable official but by a Minister accountable to Parliament?
	Nuclear must be part of a diverse energy mix, provided that it is commercially viable, but does the Minister accept that it is now too late for new nuclear to come on stream fast enough to replace our current capacity before it shuts down and that this will increase our dependence on gas imports until at least 2020?
	On coal, will the Minister confirm that the large combustion plant directive will close a third of our coal capacity but, since it was agreed by the Government in 2001, not a single carbon capture and storage plant has been authorised to replace it? Is 2014 still the date by which any entry in the Government's CCS competition must be up and running, or will the Minister confirm what the industry tells us—that it has had to be put back yet again?
	On renewables, Britain has the lowest proportion of energy from renewable sources of any EU country apart from Malta and Luxembourg. As the Secretary of State intends again to entertain his colleagues in another place by blaming the gaping hole in our energy supply on rural district councils rather than on the void in energy policy, why the Government have not proposed reforms in their Statement to allow communities to benefit from wind farms is beyond me.
	Britain's consumers and businesses will pay through the nose for the last-minute scramble that the Secretary of State has announced today to cope with the blackouts that he predicted in July. Maybe the Minister will explain, clearly and simply, why the Government have allowed us to get into this state. Perhaps he will accompany his response with an apology to the British people for 12 years of negligence, for which we are now paying the price.

Lord Redesdale: My Lords, I must apologise for being slightly late. Business always collapses in an annoying fashion when you have a gin and tonic in the Peers' Guest Room.
	One of the things that slowed me down on my way was the large number of great tomes that have come out, which I find rather bizarre. The statement seems to have two purposes: the first is to print a large number of documents that we have to read in great haste, and the second, of course, is to give the go-ahead to the nuclear sites. Much of the statement is about nuclear new-build, and the Government are keen to give the go-ahead to the 10 new sites. These documents had to be published to meet the legal requirement before the sites can be approved but, from the tone of the statement, you would not put your money on being an opponent of any of those sites being built. It gives the impression that any opposition will be completely pointless.
	I am not a BANANA—that is a great expression that I heard recently, Build Absolutely Nothing Anywhere Near Anyone—but we will need to look at a mixed bag. Of course we on these Benches do not believe that nuclear is the option.
	I have two questions, which I have raised on numerous occasions. I am speaking on the Front Bench because my noble friend Lord Teverson could not be here today, but in my former capacity I usually made this point, and now I have the opportunity to make it again: nowhere does the document mention where geological storage of the waste has been considered, and that problem does not seem to have been addressed. The second important issue is that, although the sites have been approved, we still have no indication of what type of reactor we are looking at. It would be interesting if a planning decision were being taken without the type of reactor that was to be approved having been settled on.
	Other aspects of the policy statements are to be welcomed. There are obvious implications for climate change from the use of coal, but we have long argued that the implementation of carbon capture and storage is vital and so we welcome the statements. However, as the noble Baroness, Lady Wilcox, pointed out, carbon capture and storage is still on the drawing board. I noted with interest use of the expression "carbon capture ready" rather than "it will be in place before build". When a new energy Bill comes forward, will the Government look at the rather unfortunate implication of the Crown Estate having a legal obligation to make as much money as possible out of the sea bed? It will add considerably to the cost of any carbon capture and storage, and it seems rather strange that the Government should be giving with one hand and taking with the other.
	Much energy is being spent on nuclear, but the thin document on networks infrastructure is not as comprehensive as it could be. Infrastructure needs to be addressed far more closely, because it seems to fall outside the remit of many of the White Papers that have gone forward. There is a real issue here: most infrastructure is more than 30 years old and will need to be replaced. Do the Government have a figure for the replacement of the high-level line infrastructure?
	The document on renewable energy, although I was speed-reading it, looks extremely good and will be helpful, although it seems that the size that a wind farm needs to be to fall within the remit is great, especially for onshore wind. That would be particularly unfortunate. I am a great advocate of wind turbines. Some are soon to be built very close to me and I am rather looking forward to it, which makes me unusual, it seems—in this House, anyway. The level at which the policy kicks in is extremely high.
	Among the other renewables in the document, there seems to be a glaring omission. Although the burning of biomass and incineration are mentioned, anaerobic digestion is not. I must declare a pecuniary interest: I am the chairman of the Anaerobic Digestion and Biogas Association, a worthy body—under the new rules, one is allowed to speak about one's interest if it has a wider context, which this does. Anaerobic digestion is, we believe, capable of producing 20 per cent of our domestic gas. If 1,000 plants are built, which most of the experts believe is possible, it would account for a build of £5 billion, most of it coming from the private sector, and deal with energy security. It is unfortunate that it has been left out of the document. Why are the Government not focusing a great deal more on this important subject?

Lord Hunt of Kings Heath: I thank the noble Baroness and the noble Lord for their welcome for the general thrust of the policy statements published today. I do not accept the noble Baroness's analysis of the Government's approach to energy policy, nor her rather alarmist statement about potential blackouts later in this decade. The Government have taken a strong strategic role. The fact that we are here today with the draft national policy statements is an indicator of that. The fact that we have led the way in terms of grid reform, that we have given the green light to new nuclear and clean coal, and that we have challenging targets for renewables is clear evidence of a Government who have got energy policy right and will drive it forward with determination over the years ahead.
	I remind the noble Baroness that it was her own leader who talked about nuclear as being a last resort.

Lord Jenkin of Roding: That was years ago.

Lord Hunt of Kings Heath: My Lords, it was not that long ago. If the party opposite is going to make criticism of this Government's decision on nuclear, it needs to look at its own record as well.
	On whether we have enough electricity generation, as the Statement said, great progress is being made. Two gigawatts of capacity has been constructed this year; another eight gigawatts is under construction; another 10.5 gigawatts has been consented to. Of course, we cannot be complacent, but a lot of good work is being undertaken.
	The noble Baroness welcomed the overall thrust of the changes being made to the planning system, but she was concerned that Ministers would not take the final decisions in relation to individual applications. That is quite deliberate; we have seen it appropriate to have a separation whereby Ministers make decisions in relation to the national policy statements after scrutiny by Parliament—it is right for Ministers to make the policy—but where individual planning decisions are made by an independent body. That separation is likely to lead to greater public confidence.
	On coal, we are still in a position to be a world leader. We still hope that the 2014 demonstration deadline will be achievable; two bids are in the process for the first competition; I have taken part in a number of international discussions about CCS; and there is a determination to see a considerable number of scaled-up projects developed. There is no possibility of meeting the emission reduction targets which we have set and which we hope through Copenhagen will be set internationally without the development of CCS. I agree that it is important that we should be a leader.
	On renewables, it is true that we started from a low base, but we have made great progress in recent years. Electricity generation through renewables reached more than 5 per cent in 2008; we want to build on that. However, clear concern has been expressed about the record of local authorities, particularly those represented by the noble Baroness's own party, in refusing many applications. The NPSs are obviously concerned with nationally significant infrastructure projects, but they set the parameters within which local planning decisions will be made. It is very important to bear that in mind.
	I welcome the general comments of the noble Lord, Lord Redesdale. I readily admit that there are a considerable number of documents which will need to be considered very carefully. He focused particularly on the nuclear NPS and implied that, because we decided that we should do a lot of the assessment work around individual sites to present in the NPS, it means that decisions are a fait accompli. I must resist that interpretation. It is laid down that each application has to go through due process. I am confident that the IPC will go through all the processes that need to be gone through. We believe that the inquisitorial, as opposed to the adversarial, approach will allow local people rather better involvement in decisions than under the old system. I was reminded of the public inquiry that occurred in relation to Sizewell B, which I understand took more than 300 days of public hearings, only 30 or so of which were concerned with local issues. I reassure the noble Lord that the process will be vigorous. We can expect stakeholders and interested parties to look carefully at the way in which the whole process is undertaken. It is important to reflect that if local people have objections they will be allowed to express them much more coherently, transparently and easily than in the past.
	On CCS, the noble Lord made an interesting comment about the Crown Estate. It is probably beyond my remit to discuss the terms under which the Crown Estate must produce income. However, I always welcome debate and transparency about the doings of the Crown Estate and I would not discourage him from allowing us to debate those matters in due course. Of course, he will be aware of the Crown Estate's very important role at the moment in terms of the licensing regime for wave and tidal power, which is very important indeed.
	On waste management, the noble Lord probably missed the point from the Statement that we are satisfied that on the basis of the science and international experience, effective arrangements to manage and dispose of the waste from new nuclear power stations can be put in place. On the issue of reactor designs, we have today opened consultation on the proposed regulatory justification for two different reactor designs and clearly we will invite comments on that.
	In relation to geological disposal facilities, of course we have had expressions of interest from local communities in Cumbria. The process was described as to how we would take this forward in the White Paper Managing Radioactive Waste Safely (MRWS), and I am satisfied that we are making progress in the way we ought to do so.
	As far as the electricity infrastructure is concerned, the NPS does refer to the Electricity Network Strategy Group report, Our Electricity Transmission Network: A Vision for 2020, regarding increases in generation and changes in direction. I would refer him to that.
	As far as anaerobic digestion is concerned, the noble Lord knows that I, too, have a considerable interest in that. It does have great potential. Whether we can go as far as his estimate is another matter. I am grateful that he gave me a little notice of this, because I am advised that anaerobic digestion is covered in section 2.57, which refers to biomass and waste combustion. It refers specifically to biogas, sewage, sludge and animal manure. These are all technologies associated with anaerobic digestion. I hope the noble Lord is reassured.

Lord Lea of Crondall: I declare an interest as the patron of Trade Unions for Safe Nuclear Energy. This has kept the flag flying for nuclear for the past 20 years since Chernobyl and we are now seeing pretty firm dates for increases in the nuclear share.
	On the question of consultation, I welcome the French involvement. However, I point out, perhaps tongue in cheek, that when we recently met some French energy experts from parliament, they had a joint committee deciding on nuclear sites. We asked them what the procedure was and how much consultation there was with people who would be affected in the localities. The chairman of the French delegation said, "That is an interesting question, but let me tell you that when one is draining a swamp, one does not consult the frogs".
	We do have consultation built into the Statement, and I shall read the sentence:
	"The Infrastructure Planning Commission will make its decisions on the basis of a clear timetable".
	It would be nice to see, on a bi-partisan basis from the Opposition Front Benches, a little more strategic agreement up front that we will need all the political leadership we can get on this.

Lord Hunt of Kings Heath: My Lords, I welcome my noble friend's comments and obviously the work that he has been doing over the years. I believe that nuclear generation has a great contribution to make to this country in the future, and I am delighted that we can see a renaissance in the nuclear industry as a result of the decision to give the green light to new nuclear. As far as consultation is concerned, in a sense we have a consultation on the national policy statement, but also there will be a site-specific consultation that will take place during this consultation period. That will then come to be considered and there will also be parliamentary scrutiny.
	I believe it is right for there to be proper consultation and it is right for people to make their views known. Since the announcement of the Government's decision on nuclear, I have been pleased by the general response which I think has been as positive as one could expect. I agree that it is important that we move forward with as much consensus as possible.

Lord Jenkin of Roding: My Lords, I welcome much that is in the Statement; I agree entirely with my noble friend on the Front Bench that it is probably 10 years too late. However, I find it quite astonishing that the Secretary of State has said, and indeed the Minister has repeated it today:
	"That is why we were right last year to end the moratorium on new nuclear in this country".
	They had been pressed year after year by people from all walks of life, not just the trades unions, though they were very active as the noble Lord, Lord Lea of Crondall, has said, but by Members of both Houses, that they were taking a very serious risk in turning their backs on nuclear. The phrase used then was "keeping the nuclear option open". That they can now seek to take credit for deciding to move forward with nuclear actually passes understanding, and I would have thought that there might have been some greater sense of shame that so much time on this has been wasted.
	I have a couple of questions for the noble Lord. He referred in the Statement to the announcement that:
	"Today we are opening consultation on the proposed regulatory justification for two different reactor designs".
	I had been given to understand that in fact there was going to be a justification statement made today, alongside the six documents which the Government have published. As I understand the matter, the justification is required under the 1996 Euratom BSS Directive 96/29, and is implemented in regulations made in this country, the Justification of Practices Involving Ionising Radiation Regulations 2004. Is this document that the Government have referred to in their Statement that justification, or is it yet another preparatory stage before there can be justification?
	I am asking this question—and I am sure Ministers have been warned of this by their officials—because the legal challenge that they are likely to face from some of the diehard anti-nuclear brigade is going to centre on this justification document. I should be grateful if the Minister could say something about that.
	There is one other point, not related directly to energy. I have just one of the six documents here, which clearly states:
	"Presented to the House of Commons pursuant to Section 5(9)(b) of the Planning Act 2008".
	Section 5(9) of the Planning Act says:
	"The Secretary of State must—
	(a) arrange for the publication of a national policy statement, and
	(b) lay a national policy statement before Parliament".
	Why do they put "House of Commons" in these documents? In fact, the Planning Act contains in Section 9 a provision indicating that this House will have as much say in the discussion of the applications and the advice to the IPC as the other place. What is the purpose of being deliberately provocative towards Members of this House by putting the words "House of Commons" in these documents? They are pandering to those in the other place who have always disliked this House. I find it very shaming that Ministers should yield to that sort of temptation.

Lord Hunt of Kings Heath: My Lords, I am a long-standing admirer of the noble Lord, and he put his points with his usual forthrightness. I do not agree with his analysis or the implication that the Government have delayed making key decisions on energy. However, he knows that I share his view of the importance of nuclear energy. We now have a great opportunity to go forward with a great deal of confidence and look forward to a hugely positive impact in jobs, skills and investment in the nuclear sector.
	The justification is in the consultation that we have issued. The noble Lord is right that regulatory justification is a process required under the Justification of Practices Involving Ionising Radiation Regulations 2004. I understand his frustration; he thinks that, because it is a consultation, it will delay the statement of justification. However, we are doing this for the very reason that he mentioned—the potential for this to be looked at very carefully by all sorts of stakeholder interests. We must ensure that we get it right, which is why we think it better to have a consultation first before we make the formal statement.
	On what is contained in these documents, where it says that it is presented to the "House of Commons", the noble Lord has me bang to rights. He is quite right; the Planning Act is clear that it is a statement that should be made to Parliament. A mistake has been made and, as Minister, I accept responsibility. I apologise to the House. My understanding is that we are printing new sheets to be pasted in to the documents to make sure that that is clear. I assure him that it was a mistake and not a deliberate effort to undermine the role of this House in these matters. I fully expect that there will be an opportunity for us to debate, perhaps at some length, the national policy statements as part of parliamentary scrutiny. I have no hesitation in apologising to the House.

Baroness Hamwee: My Lords, if the structure that the Government have introduced of national policy statements, which are to attract the bulk of the debate, leaving the IPC to do a rather narrow job, is to be successful, consultation must itself be successful. I see no detail—obviously I have not had the chance to spend very long on it—about how that consultation of the citizen is to be carried out. I am provoked by the misprint only to ask the Minister whether he does not believe that the NPS justifies long and detailed scrutiny and not simply a debate. More importantly, what is the process for consulting people outside this building? Planning policies in the past have regularly set out in detail the process of consultation. Although it is referred to in debate, there seems to be no indication of how the consultation is to be taken forward and how people are to respond to it. What we have heard is a Statement from the Dispatch Box this afternoon that the Government will drive forward their policy with determination.

Lord Hunt of Kings Heath: My Lords, clearly the noble Baroness is absolutely right that in a new planning system that makes much of the need for members of the public to have a proper input into decisions, we should have a good consultation on the national policy statements, and we certainly seek to do that.
	There will be parliamentary scrutiny. I mentioned the word "debate";. it is entirely a matter for the House to decide how it wishes to scrutinise the national policy statements. In the Commons it is likely to be through a Select Committee, which one would expect to produce a report to which the Government would have regard, and the committee can recommend a debate in the House. In this House, it is very much a matter for the House to decide.
	We are holding five events in different parts of the country to encourage the public and communities to respond to the consultation; we have commissioned an organisation called Planning Aid to publish leaflets setting out background information; and we are making it easy for people to respond on the website. I assure the noble Baroness that we want the consultation to be successful and that the Government will consider very carefully the responses made. However, we should not underestimate that a very important part of this process is parliamentary scrutiny, which is very much in the hands of Parliament.

Lord O'Neill of Clackmannan: I thank the Minister for his Statement. In my capacity as chairman of the Nuclear Industry Association, I was getting rather impatient because of the delays. However, I well understand the need for the delays. This is an area in which we might well see vexatious litigation emerging as a major barrier to progress.
	The comprehensive character of the Statement and its balanced nature, including not only nuclear but renewables and the potential—albeit somewhat long-term—for coal, is to be welcomed. It is flexible and pragmatic on nuclear sites, but our friend in the other House, Malcolm Wicks, the former Energy Minister, has indicated that we would have not only replacement nuclear generation capability but also an increase to something of the order of 40 per cent of the generating capability of this country accounted for by nuclear. This Statement gives reassurance to those looking for a degree of confidence that they can invest in the future, and to do so in the knowledge that it will not be subject to delay and long interruption.
	I make one final point: this will be a very expensive programme of capital investment. We would like to think that disadvantages sections of the community are not exposed to higher energy prices than necessary.. Uncertainty, as we have seen with gas supplies and gas prices, means that the cost to individual domestic consumers, particularly those in poorly insulated houses, becomes unacceptable. So we must have the lights on, but on at a cost that the public and industry together can afford.

Lord Hunt of Kings Heath: My Lords, I well understand the frustration of many in the industry about the length of time that it has taken to produce the national policy statements. He is right: we have to make sure that they are correct. It is better producing them now than in the summer.
	On the question of how much nuclear generation there should be, the noble Lord will know that the Government do not believe that they should set a target. However, in setting out the energy need, the national policy statement has some helpful indicators. It is made clear that the nuclear sector should be free to contribute as much as possible of the 25 gigawatts of non-renewable energy required by 2025. That is not a target; it is simply stating that, on the best estimates we have at the moment, in 2025 we will require about 25 gigawatts of non-renewable energy. It is then up to the nuclear developers to see how much they will go for. It is noticeable that, as of today, the energy companies intend to produce 16 gigawatts of nuclear energy, but there is no reason why their current intentions should be a limit on what might occur in the future.
	My noble friend is surely right about high energy prices. There will be a cost, but we must ensure that through energy efficiency we can reduce some of that cost. We also have to make sure that it is not at the expense of those who suffer from fuel poverty.

Lord Dixon-Smith: My Lords, I apologise to the Minister for missing the first minute of his Statement. Like the noble Lord, Lord Redesdale, I was caught metaphorically speaking with my trousers down elsewhere.
	I welcome the Statement. It is a good thing that at last at last we have one; .at last we have some movement. Having said that, we need to keep a rational perspective about nuclear energy, which I entirely agree we need and will have to put in place. The noble Lord, Lord Flowers, who we sadly no longer see in his place nowadays, remarked to me well over 10 years ago that, in the final analysis, mankind had only one source of energy and that was nuclear. We had a choice between having a power station here or 98 million miles away, and he knew which one he preferred. He was prescient.
	I wish that the Government were paying more attention even now to 2050. We need to remember that most of the massive plant that is likely to be constructed as a result of this Statement today is likely to still be living and working in 2050. We are gambling with the 2050 target, particularly in relation to coal-fired generation. We are gambling that carbon capture and storage will work and that it will capture 100 per cent of the carbon. I would welcome an assurance from the Minister that it will do that because, if it does not, it will put an even greater question over the whole subject. We are also gambling that it will be economically competitive. There is a real possibility that that will not be the case. I could go on for another two or three minutes but I see that our time is up. I will give the Minister a chance to reply.

Lord Hunt of Kings Heath: My Lords, I thank the noble Lord for his interesting intervention. We seem to have a collection of trousers down and gin and tonics. Where is the noble Lord, Lord Rix, when you need him?
	The noble Lord makes an interesting point about nuclear power. We have reflected in the Statement what my right honourable friend the Secretary of State refers to as the trinity of nuclear, renewables and clean fossil fuels. Clearly, to ensure energy security, we need to have a diversity of both supply and generation, and we need to have it in a drive towards a low carbon future. The mix that we are proposing will enable us to do that.
	On coal, I said earlier that if we are not able to develop CCS, there is absolutely no way that this country and many countries of the world, including China and India, can meet the kind of targets that have been set for 2050. That reinforces the importance of CCS and why we should adopt a leadership role in this country. Of course, there is a safeguard in the Statement. If as a result of the independent evaluation it transpires that CCS has not worked in the way that we wished it to work, we will have to return to the issue of what to do about existing coal-powered stations and their emissions. That will clearly be a subject for review towards the end of this century. I, for one, remain optimistic about CCS and its potential for this country.

Local Democracy, Economic Development and Construction Bill [HL]

Main Bill Page
	Copy of the Bill
	Commons Amendments

Commons Amendments

Motion on Amendment 1
	Moved by Lord McKenzie of Luton
	That this House do agree with the Commons in their Amendment 1.

Lord McKenzie of Luton: My Lords, this amendment introduces a new clause relating to local freedoms. It was introduced in the other place by the honourable Member for Newcastle upon Tyne Central to, as he put it,
	"correct a significant inequality. It would also correct an anomaly that undermines freemen, where they remain, when exercising functions on behalf of their communities, and that undermines a significant part of our constitutional heritage".—[Official Report, Commons, 13/10/09; col. 222.]
	The amendment will mean that the daughter of a freeman can claim to be admitted as a freeman on the same terms as the son of a freeman. It also provides that the son or daughter of a freeman can request that they are admitted to a guild whether or not their parent had been admitted as a freeman at the time of their birth and whether or not they were born in the town or city in which the guild exists. Traditional activities need to reflect the modern world. In this day and age it is right that there should be equality of treatment between men and women. This amendment ensures that this occurs in relation to freedoms granted for an area.
	When accepting that Clause 27 should be inserted in the Bill, my noble friend Lady Andrews stated that traditions needed to work in a non-discriminatory way and we attach great importance to seeking equality between men and women. As I have said, it is not acceptable in this day and age to treat women differently. There is also a need to make the guilds more relevant to today and ensure that they do not die out. Women must be allowed to become freewomen if they wish; that can only be to the advantage of guilds.
	I understand that my noble friend Lord Graham may feel that the Commons amendment was unnecessary, given the provisions he introduced in Committee in this House, which were entirely permissive and so allowed guilds to decide among other things whether or not they wished to allow women to claim the freedom. However, in the other place it has been argued that providing equality should be a requirement rather than a choice and the Government have accepted that argument. We agree with the central argument that women should be afforded the same rights as men, particularly in relation to freedoms granted for an area.
	I know that my noble friend Lord Graham has worked tirelessly on this issue and the freemen of our towns and cities have much to thank him for. Without his efforts many guilds would be facing real difficulties in bringing their admission rights up to date and in some cases even surviving. For our part, we believe that the amendment laid by my noble friend strengthens the Bill by allowing admission rights to be changed more easily and flexibility for the guilds to amend their rules to meet any challenges that may arise in the future. Importantly, it provides a considered framework to make changes consequential to allow daughters to become freemen and amend other admission rights.
	The daughters of freemen can become freemen on the same terms as sons of freemen as a result of the Commons amendment—the rights and benefits equally apply—but admission to a guild can also grant benefits and rights to the spouses and widows of freemen and Clause 27 will allow the guilds to consider and amend such rights—those consequential on permitting women freemen. In some cases I understand that the widows of freemen have certain benefits, such as charitable payments or the right to certain accommodation in retirement. The freemen guilds, using Clause 27 and the new schedule to the Local Government Act 1972, introduced by my noble friend, will be able to amend their admission rights more easily so that these benefits can also be granted to widowers or, indeed, civil partners of freemen and freewomen.
	Clause 27 will also allow guilds to consider widening their admission rights to individuals other than simply a son or daughter of a freeman. This might, for example, include permitting sons-in-law, daughters-in-law, nephews and nieces of freemen or freewomen to be eligible to seek admission. Of course, Clause 27 will also allow, as a result of the admission of daughters, that they might be called freewomen if the guild so resolves.
	Clause 27 will also enable guilds to amend other admission rights, such as amending, perhaps, the terms of servitude as an apprentice to a freeman, or widening the rights of apprentices serving in the town generally. In addition, the framework introduced by Clause 27 will allow changes to be made more easily to other admission rights contained in the royal charter. It will enable guilds to change admission rights operated by custom by a simple resolution and provides an easier route for changes to rights contained in Acts of Parliament.
	In summary, these two clauses work together. My noble friend's hard work has not been in vain—indeed, far from it. I am aware that concerns have been expressed about difficulties that guilds may have in adopting these new admission requirements. However, as I have said, the new schedule to the Local Government Act 1972 will ensure that consequential changes can be made to the rights and privileges of the freedom as a result of daughters gaining admission and the other changes made by the new clause introduced in the Commons. It will enable freemen to consider the implications of admitting daughters and change any of their rights accordingly if there is a need or desire to do so.
	Moreover, I understand that several guilds have, over the years, made the same changes to their admission rights as those provided by the Commons amendment, and have been able to deal with any difficulties that arose. I am sure that all other guilds are capable of doing the same, especially now that there is a clear framework in place to make such amendments. There is time to prepare for the change, given that the relevant clauses are not commenced until two months after Royal Assent. Together with Clause 27, this amendment updates and helps to preserve one of our most ancient traditions, while providing equality of opportunity for men and women, a principle to which I know this House attaches great importance. I commend it to the House. I beg to move.

Lord Graham of Edmonton: My Lords, I am grateful to the Minister for having taken care in dealing with this matter more fully than he might have done. I had made known to him the concerns that had been expressed to me outside the House.
	This could have been a joyous moment in my parliamentary life. Having spent almost six years seeking to assist the Guilds of Freemen in bringing their procedures into the 21st century; having successfully piloted three times through this House a Private Member's Bill with all-party support to do so; having seen it fall in the other place due to one voice shouting "Object!"; and then having the Minister and officials at the Department for Communities and Local Government draft a comprehensive Bill, only to have it handed out to a Member in another place—Derek Conway—who was unable to proceed with it, I was then able to present that department-drafted Bill as an amendment to this Bill. It had unanimous support from every Bench in this House. I took care to consult not only the freemen of England and Wales, but more widely. When the Bill left this place with good will all round, I considered that I had achieved a modest advance, especially for women in their desire to inherit rights enjoyed by their fathers within the guilds movement. It was not to be.
	Sadly, a rift within the freemen has revealed that the Newcastle upon Tyne guild holds a different view from almost every other guild, to such an extent that when the Freemen of England and Wales embraced the comprehensive new clauses that I introduced, Newcastle asked its four MPs to table the amendment now before us. As I intend to show, what is put forward as a simple amendment, designed to bring equality for women, is seen by many freemen as running counter to a prime argument for my clauses, which was stressed by the noble Baroness, Lady Andrews, who took the Bill through the Lords. That is, my clauses were permissive and it was an enabling Bill—not compulsory, taking fully into account the fact that guilds throughout the land are not uniform; they are embedded in their own history and heritage. My new clause gave that degree of flexibility which the freemen wanted and which the amendment before us denies. It is mandatory and not permissive.
	I have no argument with either Newcastle or my parliamentary friends in another place, but I ask the House to try to understand the following. When this amendment was before the Committee in another place, Dan Rogerson, a Member of the Committee, said:
	"The new clause was tabled by the hon. Member for Newcastle upon Tyne Central (Jim Cousins), who is not a Member of the Committee. I was contacted this morning by Newcastle City Council and told that councillors wished to raise a crucial question by way of this new clause".—[Official Report, Commons, 18/6/09; col. 273.]
	The Minister of State then said:
	"I very much hope that the hon. Member for North Cornwall welcomes Clause 27, which was introduced in the other place by Lord Graham. In our view, it meets the aims of the new clause in a more sustainable way".
	Later she said:
	"As I said, I understand that the new clause's aims were met by clause 27".
	Even later in the same debate, the Minister said:
	"Perhaps a discussion between the hon. Member for North Cornwall and my hon. Friend the Member for Newcastle upon Tyne Central would be helpful, because I am advised that clause 27 meets many of the new clause's aims and—crucially—in a more sustainable way".—[Official Report, Commons, 18/6/09; col. 274.]
	I have learnt from bitter experience that this is a complicated matter and the implications of accepting the Newcastle upon Tyne amendments may well not have been fully understood. Nor was the fact that Newcastle was isolated within the Guild of Freemen. Last week I received a copy of a letter addressed to my noble friend Lady Golding, herself a freeman of Newcastle under Lyme guild, from Derek Miller, clerk to the trustees. It read:
	"However at the very end of the passage of the Bill through the Commons an amendment was tabled which, if I understand it correctly, would make it mandatory for the daughter of a Freeman to be admitted to the Freedom where her brother would have the right to be admitted".
	I ask the Minister a direct question. Can he confirm that this understanding is correct? The letter goes on:
	"If my understanding of the position is correct on this particular point affecting admission procedures this completely undermines the concept of ENABLING as opposed to REQUIRING as set out in the amendment proposed by Lord Graham. The Trustees feel that such an amendment is not in the best interests of the Newcastle under Lyme Trustees insofar as it requires admission no matter what the circumstances of any Body of Freemen might be: do they see it right in principle.
	Some Bodies, including Newcastle under Lyme, may have land or other assets or investments involved, and a compulsory admission of women in these circumstances is effectively an expropriation of existing historic rights ... It is not that the Trustees feel that the admission of women is wrong in itself, but they believe it is appropriate for each body of Freemen to consider carefully the implications of such a move without it being imposed upon them in this way.
	The amendment proposed by Lord Graham had the backing of the Freemen of England and Wales and I suspect virtually every other Body of Freemen apart from those in Newcastle on Tyne".
	I received another letter from Alan Fallows, a past president of the Freemen of England and Wales, writing on behalf of the Guild of Freemen of Shrewsbury. He wrote:
	"All concerned are well-versed in the history of the failure of the previous 'Family Succession Bill' after being deemed 'unfit for purpose' so we are dismayed to see that Clause 4 effectively mirrors the terms of that failed Bill and is equally prescriptive. Our first point is that we see absolutely no reason or necessity in the new clause. The original clause perfectly conveyed the essence of the fact that the Freedom is differently constructed and operated in each place and is restricted there by differing customs and legal constraints by either charter or statute. The situation requires that an 'enabling Bill' is utilised to facilitate different amendments to admission criteria in each place without the imposition of a limited national ruling. Your clause covers not only the admission of women but also the problem of location of birth, date of birth, stepchildren and children-in-law. These facts were recognised and supported by the Parliamentary Under-Secretary and the Minister of State when they argued against the necessity for inclusion of the new clause in Committee".
	Where do we go from there? If what I am being told by guilds of freemen is along the lines of the above, I sense that there is a storm brewing which bodes ill for good relations with the Government. I despair when I think of the enormous amount of time spent on this by people within the department and by Ministers. I pay full tribute to the noble Baroness, Lady Andrews, who tirelessly sought to draft an amendment that would achieve not what Parliament wanted but what the freemen themselves wanted. I am dismayed at the turn of events.
	By virtue of the parliamentary timetable, with this Session concluding in three days' time, I cannot see that my seeking recourse to normal means of objecting would be practical or successful. However, it must still be within the Minister's power to withdraw this clause so that meaningful discussions can take place within the totality of the freemen of England and Wales to try to produce a change that will satisfy all parties. Clause 27 can still be used in the interim. Will the Minister consider my suggestion? If he does not wish to do that, I forecast that the department will hear from many puzzled and angry guilds and that all the good work done by officials will be set at naught.

Baroness Golding: My Lords, I thank my noble friend Lord Graham for all the work he has done on behalf of freemen. I correct him in that I am an honorary freeman of England and Wales. In fact, I was proposed by the freemen of York, not by the freemen of Newcastle-under-Lyme, who are called burgesses, not freemen, which complicates things even further.
	The clerk to the trustees of the burgesses of Newcastle-under-Lyme wrote to me and I have passed the letter to my noble friend Lord Graham. I received a further letter from them, explaining where they have difficulty with the Bill, although they have no difficulty with the principle of the Bill or with the enabling Bill of my noble friend Lord Graham. The clerk to the trustees wrote that he had,
	"difficulty with the wording of what is proposed. In Newcastle-under-Lyme the status of freedom is conferred on birth. On coming of age, a young man presents himself to the Mayor of the Borough for confirmation of that status. As such, he does not 'claim to be admitted' in that the Mayor does not 'admit' a man to Freedom but simply acknowledges that he has held status which he has claims from birth. Accordingly, if the Bill is enacted in its present form, I should be left with a very difficult problem of construction. Sub-clause (2)(1)(A) clearly addresses the case where a man claims 'to be admitted as a Freeman' i.e. it speaks to a future state of affairs which lies in the gift of a third party. Those words are not, as I say, apt to cover the situation in Newcastle-under-Lyme and on balance I would feel compelled to advise the Trustees that the amendment now proposed if, enacted, would have no application within this borough".
	That adds a further complication to what my noble friend Lord Graham has said. It is obvious that rules for many of these guilds of freemen vary from area to area. This matter has to be tackled constructively through discussion with the freemen, who know their own rules, and it has to be agreed. The freemen are not in principle against women being adopted as freemen but they believe that the clause is so flawed that it will not apply to some of them but may apply to others. Therefore, I ask that these fresh clauses be reconsidered, we have a general discussion on them and that, if necessary, we include the measure proposed by my noble friend Lord Graham. I believe that his proposal, which allowed each guild of freemen to deal with the matter as they saw fit, would be the best way to proceed.

Lord Bates: My Lords, I wish to comment on the new clause. I thank the Minister and his team for setting out its purpose so clearly and I register the apologies of my noble friend Lady Warsi, who is unable to take part in this important debate.
	This measure draws to everybody's attention the difficulties that arise when we open up these ancient bodies to scrutiny in the modern day. We find that some strange things are happening that would not occur if these bodies were set up today. None the less, these bodies are important. Like the noble Lord, Lord Graham, I am from the north-east of England—from Tyneside. When we talk about the freemen of the City of Newcastle, a reverence is displayed that is not displayed when we talk about any other body, because these people are the custodians of that most hallowed turf of St James' Park and comprise the landowners and guardians of huge tranches of central Newcastle.
	I seek clarification on the following point. I defer to the knowledge and extensive interest displayed by the noble Lord, Lord Graham, and the noble Baroness, Lady Golding. It seems to me that the guild in Newcastle has the opportunity to appoint females and males to the position of honorary freeman. When I looked on the City of Newcastle's website, I found that Councillor Margaret Collins is an honorary freeman, as are Harriet Dunlop, Daisy Clark, Joan Silcox, Rachel Somerville and a number of others, so clearly there is an ability at present for males and females to be appointed to this position. Therefore, it cannot be argued that this is a male fraternity, because clearly it is not, although the stewards appear to be exclusively male.
	It was interesting for me as a Conservative to note the remarks made in another place by Jim Cousins as he leapt to the defence of the hereditary principle. However, this is a serious matter on which people have strong feelings. I offer the following principles and thoughts from this side of the House. These local guilds and associations are part of our history and culture and are important to our sense of belonging and our sense of history. They also have some significant modern-day powers in their custodianship of assets, property and land in many of our urban areas. We want to see that land and those green spaces preserved.
	I very much agree with the noble Baroness, Lady Golding: using general legislation to tackle particular problems in particular guilds constitutes a slightly heavy hammer. Our policy is one of localism. We approve of the idea of local people determining the terms of their area and we would very much like to see maximum flexibility given to local guilds—and, indeed, to the freemen of the City of Newcastle—to determine the composition and the order of succession of hereditary freemen in a way that they would see fit.

Baroness Hamwee: My Lords, when this debate started 24 and a bit minutes ago, I thought that it would be sufficient from these Benches to say that we welcome equality. I am not sure whether I can say much more than that, although I will confess to being a little puzzled. Although I listened to what the noble Lord, Lord Graham of Edmonton, was arguing, I am not clear whether it was for this new clause not to be included. As I read it, his original Clause 27 stays in the Bill; it is not as if we are knocking out what we did at the previous stage. I am also a bit confused by the terminology, because the term "admitted", to which the noble Baroness referred, is in the clause that is in the Bill. I accept that it is not "claim to be admitted", and that it may be the claim that is relevant rather than the admission. Having displayed such a wealth of ignorance, however, I shall go back to my point of principle: the greater the equality for women, the better.

Lord McKenzie of Luton: My Lords, I thank all noble Lords who have contributed to this debate. Perhaps I might start by addressing the concerns raised by my noble friends Lord Graham and Lady Golding. On the question that they posed to me, I do not propose to withdraw this clause. I have no authority to do that and I do not believe that it would be appropriate. My noble friend was possibly anticipating this as a joyous moment after six years of effort. I know that he has made a lot of effort, but he should not feel let down. His achievements in respect of that six years' work are embodied in the Bill; they remain there and contribute to supporting the guilds going forward.
	Yes, it is a permissive regime that is encompassed within the amendment that your Lordships previously accepted, but that sits together with those particular areas that have been carved out where there is a mandatory requirement. My noble friend asked whether it was correct that it would be mandatory for daughters to be admitted if sons could be admitted. It would not be mandatory, but the amendment says that, if the daughter should seek admission, it is mandatory to allow her to become a freeman. That is absolutely what this amendment enshrines.
	My noble friend also referred to the expropriation of rights. If the concern is that of having a dilution of assets if a greater number of members joined the guild, I am sure that there would be ways to address that. However, I am also sure that one way not to address that would be by a gender cut-off, which seems to me to be quite the wrong principle to adopt here. My noble friend is quite right that the new clause goes further than the permissive regime that he introduced through his amendments, but that regime still remains in place and it is an important part of the Bill. When I moved the amendment, I outlined some of the circumstances where it will be brought to bear. I think that my noble friend Lady Golding—and, indeed, the noble Lord, Lord Bates—referred to honorary freemen. We should be clear that we are not talking about honorary freemen here; they are a separate issue. We are dealing with hereditary freeman. It is those guilds and individuals to whom this clause and my noble friend's amendment are addressed.
	The noble Lord, Lord Bates, said that it is always difficult when you are opening up parts of ancient history. Part of what we are trying to do in this Bill is to help the guilds to ensure that they have a future as well as a past and to facilitate their moving forward with addressing their rights and responsibilities The noble Lord, Lord Bates, outlined some of those. To be clear, again, I think that the noble Lord referred to Newcastle freemen as being honorary freemen. However, they are hereditary freeman. There are different arrangements for honorary freeman. Those will, in fact, be covered by Clause 28, not the provisions that we are addressing tonight.
	My noble friend Lady Golding referred to seeing how the amendment that we are discussing fits with the requirements in some of the guilds' rules at the moment. This, again, goes back to the amendments brought forward by my noble friend Lord Graham in the schedule that was introduced in your Lordships' House. I stress that that is what gives the wherewithal to make the consequential changes, so that the mandatory provisions of this amendment can be encompassed and made whole within the context of the guilds' rules. The noble Baroness, Lady Hamwee, said that she welcomed equality; there is an extra component of that in these circumstances. I readily accept that it could be achieved under a permissive regime, but this amendment makes it mandatory and puts daughters in the same position as sons. Surely in the 21st century we should welcome that. I hope that that has addressed the concerns of noble Lords.

Lord Graham of Edmonton: Does the Minister take on board the dismay that must be felt throughout the guild of freemen movement? The freemen of England and Wales had, almost unanimously, accepted the thrust and principle behind what I would clumsily call my amendments. All but one of them were embraced. At the end of the day, the Bill will show that that one view prevailed. I simply fear for the fact that, after six years of my time, the department and its officials—for whom I have the highest respect in seeking to do that which I and others conveyed to them—will find that they have insufficient time for the next period, until the explanations that the Minister has given are worked through. It is not that they cannot work them through; indeed, they might do so. However, they were wrong-footed, as I was, in that, having passed my amendment, we did not conceive that the Newcastle view, which will be well known, would be accepted on its own. We were heartened by the Minister stating in the Commons three times that there was no need for it. Well, you pays your money and you takes your choice.

Lord McKenzie of Luton: My Lords, I take the point that my noble friend is making. I think that he is absolutely right to say that this amendment came fairly late in the process, possibly without the opportunity of more detailed discussion. If the guilds are concerned about this and if there is a potential storm brewing, clearly we have to engage to work through it and to ensure that we can move forward with these provisions.
	I should say to my noble friend that the respect that I know that he has had, in all the work that he has done over those six years, is still enshrined in the amendment that will form part of this important piece of legislation. It will be part of the way in which one can implement the so-called Newcastle upon Tyne amendment with the other opportunities that his permissive regime presents to the guilds.
	Motion agreed.
	Motion on Amendments 2 and 3
	 Moved by Lord McKenzie of Luton
	That the House do agree with the Commons in their Amendments 2 and 3.

Lord McKenzie of Luton: My Lords, with the leave of the House, I shall move that the House do agree with the Commons in their Amendments 2 and 3 en bloc and speak to Commons Amendments 7 and 10. This group of amendments brings forward amendments agreed in the other place to give powers to local authorities and other best-value authorities in relation to mutual insurance.
	In July, the Secretary of State for Communities and Local Government published the consultation paper Strengthening Local Democracy. This sought views on the scope of local authority powers, in particular around their powers to undertake mutual insurance arrangements. The consultation attracted 96 responses to the specific question on mutual insurance, with 82 per cent agreeing with the proposed power.
	The amendment adds a new clause to provide permissive powers for named authorities to enter into mutual insurance arrangements should they wish to do so. These authorities, which are described as "qualifying authorities", are local authorities—other than parish and community councils—fire and rescue authorities, police authorities and other best-value authorities in England and Wales. Authorities exercising the power will need to ensure that any proposed arrangement meets the duty of best-value as laid down in legislation. While it seems unlikely that all qualifying authorities will wish to establish or participate in an insurance mutual, clear and specific legal powers will be available for those for whom it makes good business sense to do so.
	The amendment provides that best-value authorities may establish and become members of a corporate body whose objectives are to provide insurance to those authorities who are members of the mutual. Other qualifying authorities may be members of the mutual and the mutual may also provide insurance to other bodies, which will be prescribed by regulation and which I will call affiliates. Affiliates will be those which have some association with qualifying authorities; for example, in the case of local authorities, arm's length management organisations (ALMOs), academy schools or wholly-owned subsidiaries. Broadly, the intention is for a qualifying authority to be able to sponsor an affiliate to bring it within the mutual's insurance cover as we understand that many local authorities already arrange insurance cover for ALMOs and some schools. However, affiliates will not be able to become members of the mutual.
	The qualifying authorities are provided with a power to pay premiums and other payments to the mutual insurance body and can agree to make any such payments as may be necessary in future. They can also assume financial obligations in respect of their affiliates.
	The Secretary of State in relation to England and Welsh Ministers in relation to Wales, may, by regulation subject to the affirmative procedure, amend the list of authorities that are qualifying authorities. They may also impose restrictions or conditions on the use of the power by regulations subject to the negative resolution procedure. We intend to consult on the content of such regulations. However, we are of the view that the following may be required. First, the mutual insurance body should be registered with the FSA so that it will be a body authorised to carry out the activity of providing insurance, which is regulated by the Financial Services and Markets Act 2000. Secondly, a mutual insurance company will not be able to reinsure risk with another qualifying authority mutual, although it will, if course, be able to reinsure in the market. This is to avoid a potential spiral of risk were a number of different qualifying authority mutuals to reinsure each other, with the danger of the risk effectively ending up where it began. Thirdly, qualifying authority mutual insurance bodies are unlikely to be allowed to have offshore captive insurance subsidiaries. Our view is that providing powers to local authorities which could facilitate avoidance of UK tax, or would enable the avoidance of appropriate levels of regulation which are needed to protect public money, is not something appropriate for local authority mutual insurance companies.
	Qualifying authorities are required to have regard to any guidance issued by the Secretary of State or Welsh Ministers and to any document specified in regulations, such as CIPFA guidance. Again, we will want to consult further on this.
	Commons Amendment 3 adds a further new clause to provide a list qualifying authorities which are being provided with the power to become members of a mutual insurance body. It also sets out the appropriate parliamentary and Welsh Assembly procedures for regulations.
	Commons Amendment 7 amends Clause 144 to provide commencement for these clauses which will be brought into force by order. Commons Amendment 10 is a consequential amendment to add a reference to insurance in the Long Title of the Bill. I beg to move.

Lord Bates: My Lords, I have a couple of brief points, although we are basically on the same page and we support this enabling measure.
	The Government are fond of consulting extensively, and we approve of that. However, the Minister said that there were 96 responses to the consultation. What consideration has been given to them? We were offered a headline figure of 82 per cent which agreed with the proposed power. I have seen only one of the responses—by Zurich Municipal—which was forwarded to us and other Members who participated in the earlier debate. There did not seem to be just a binary question—are you in favour or not? Zurich's response amounted to some 11 pages. Its perspective from being a municipal insurer in the UK since 1903 was that there were significant pros and potential disadvantages to allowing local authorities to set up mutual insurance companies—not least relating to the residue of underwriting risk and how that might impact on local authorities' primary responsibility to deliver local services in the event of claims.
	Can the Minister comment a little further on the substance of the responses? What consideration has been given to the thoughtful and reasoned responses of companies such as Zurich, which display a level of expertise way beyond that which I can offer in this area? How was that distilled in such a short period? The consultation closed on 2 October and the results were presented on 13 October. That does not seem to be much time in which to absorb the comments.
	My second point relates to the role of the RDAs. The RDA leaders' boards will have a role in overseeing or offering some assessment of the appropriateness of municipal insurance schemes. That may be appropriate at this time, but I am hesitant because the regional development agencies are in the vanguard of trying to claw our way out of recession. They have huge responsibilities. One of our criticisms of the RDAs throughout has been that although their primary duty is to promote business and enterprise in a region, they are often drawn into intensely bureaucratic areas that are non-core to their activities. They become involved in producing regional spatial strategies, regional economic strategies, regional waste strategies, regional cultural strategies and regional transport strategies. The RDAs have to bring all of these together. Can the Minister provide an assessment of the RDAs' involvement in fulfilling their role as regards municipal insurance schemes. For example, if they are the bodies that will license or assess whether a municipal insurance company should be established, will they carry a residue liability if that insurance arrangement were to go wrong?
	I should like some reassurance on that. My primary point is not the pedantic one regarding where residual liability may reside, but a more substantive one. These bodies are supposed to be there to help in the midst of a recession and to focus on enterprise and business regeneration in their areas. Are they being given another responsibility which they do not need and which will distract them from their core responsibility?

Baroness Hamwee: My Lords, my comments go back a stage earlier than the points that the noble Lord has just raised. These amendments, which were added to the Bill in response to the London Authorities Mutual Ltd case, seem to address a symptom, not the underlying disease. The analogy that occurred to me this morning was that the Government have just managed to fling one parcel on to a train as it is leaving a station headed for the destination of Royal Assent, but they have left what matters on the platform.
	I had a go at amendments in lieu of these amendments. I understand that the Public Bill Office said, "Good try, but not within the scope", as these amendments are limited to mutual insurance. The Minister will not be surprised that I had tried to give the Government a legislative base on which to build either a power of general competence, although I knew what response that would get, or—this is particularly important—a base for any other discrete power that may turn out to be needed because the power of well-being does not cover it. Legislative opportunities for this sort of thing are not that frequent. It is a matter of chance that this Bill was available at the time when we had the judgment in that case.
	I cannot say that insurance would have been my first choice of activity, but that is not the point. Local authorities should be free to undertake activities that they judge to be appropriate. Like others, I thought that the well-being powers were sufficient and felt a considerable sense of dismay at the judgment in this case.
	Looking for the judgment was a case of, "Be careful what you wish for". I asked the Library to find it for me and it turned out to be 91 pages. We find that we have not escaped the fine analysis of local authority powers or the line of cases arising, starting with the interest rate swaps and so on. Also, what is "incidental to the incidental"?
	The leading judgment in the case—to pick out a couple of short comments—said:
	"Promotion of well-being is not an expression one would normally associate with a somewhat complex arrangement to save money, such as the LAML arrangement, rather than with action directly to promote or improve a healthy or prosperous condition".
	The judge said later that,
	"taking steps to improve the authority's general financial position is not to be treated as something that will of itself promote or improve the wellbeing of its area".
	There needs to be a direct connection for the powers of well-being in the earlier legislation to be sufficient. We are left with local authorities not being clear about the boundaries of their autonomy and with a rich seam to be mined by particular third-party interests that oppose a proposed activity by the local authority.
	The Government talk a lot about local autonomy and every so often one finds passages that make clear the philosophy that underlies what they say. I will refer to two. The first is in their response to the Communities and Local Government Select Committee report, The Balance of Power: Central and Local Government. The Government, at paragraph 27, talk about holding constructive dialogues on the need for extra powers. They say:
	"Where specific evidence is provided to us, we will consider this on its merits".
	I emphasise the words "on its merits".
	Secondly, in the recent paper Strengthening Local Democracy, question 8 asks:
	"How best should any reduction in numbers of LAA targets ensure that services are responsive to"—
	and again I stress the following words—
	"the most important local needs as well as national entitlements".
	All that begs the question: who is doing that assessment. I could go on, but those two extracts display a philosophy that we on these Benches do not share.
	As I said, I have not been able to table the amendments that I would have liked concerning not just the power of general competence but giving the Government the opportunity to respond to a problem such as the local authorities' mutual problem. Of course, we do not oppose the amendments, but we would have liked to be able to move from the particular to the general and turn the Bill into something much more worth having.

Lord McKenzie of Luton: My Lords, I thank the noble Lord, Lord Bates, and the noble Baroness, Lady Hamwee, for their contributions to our short debate. I start with the point made by the noble Lord, Lord Bates, about the consultation. We will of course be publishing its results. On his mention of Zurich, I imagine that that is in the "against" box concerning the data, but we will be publishing that in due course.
	The provision is not mandatory. These are opportunities for local authorities to enter into mutual insurance arrangements if it is in their interests to do so.

Lord Bates: I thank the Minister for his courtesy in, as always, giving way. The more general point is that it was not an opinion poll as to whether authorities were in favour or against; the Government went out to consultation when detailed responses were given about Zurich. Can he explain how that information given by very busy people in organisations who have put a lot of time and thought into it has influenced the amendments before us now?

Lord McKenzie of Luton: Let me say generally on consultation that it is the Government's policy, as the noble Lord will be aware, to distil the results and publish them. We do not typically publish all the responses verbatim, but seek faithfully to represent the spread of views. Clearly the time between the conclusion of the consultation and the need to make progress on the amendments has been relatively short. I acknowledge that, but I hang on to my point, which is that nothing here requires local authorities to enter into mutual insurance arrangements. This is an enabling, permissive provision that provides the framework within which they can do it. It is important that that framework is provided, in part for the reasons touched on by the noble Baroness. The judgment in the LAML case was that local authorities, notwithstanding the well-being power, did not have the vires to enter into the arrangements that they did. We know that mutual insurance arrangements, properly conducted, can be very beneficial to local authorities. If they have a chance of getting better value from their insurance arrangements—often, mutual insurance arrangements also drive good risk management behaviour—that seems to me to be all to the good.
	As for the role of the RDAs, I do not fully understand the noble Lord's point. RDAs will not be qualifying authorities able to enter into mutual insurance arrangements. The point that I made when moving the amendment was that we would envisage that mutual insurance arrangements would be regulated by the FSA, as are all other insurance companies. That is the quality and regulatory issue about which we should be concerned.
	The noble Baroness referred to the judgment in the LAML case, which had to be addressed. Of course there are wider, serious issues around competence, although it could be labelled in another way. We have been clear in our support for councils that want to undertake innovative activity to drive efficiency and to act in their interests and the interests of local communities. The aim is something that we share. We have taken seriously the LAML judgment that suggests the existence of a general power, but it would not have altered the findings. This is why in this case to ensure that local authorities are able to undertake mutual instance, a specific enabling power is needed, and we have used the opportunity of the Bill to drive that forward.
	In our recent consultation, we asked councils to identify where there are similar complex arrangements, other than mutual insurance, which are potentially out of the scope of the existing powers, and we are committed to following up on any issues raised. We will consider if there are cases in which a general power may provide reassurance for local government. I am sure that the debate about the general power of competence will not go away, but it is better that this debate is on wider issues rather than specifically mutual insurance.

Baroness Hamwee: Does the Minister accept that the local government world probably will not know whether to be worried about something until somebody takes it to court?

Lord McKenzie of Luton: There is always a risk, particularly for local authorities that are trying to do innovative things. That is why we need to use the opportunity of the consultation fully to understand the types of arrangements and situations that local authorities are facing to make sure that they have the vires to undertake them. The noble Baroness makes a reasonable point. Everyone will have assumed that the powers that local authorities have would have been sufficient to undertake those mutual insurance arrangements but, at the very least in the timeframe available to us in the Bill, we can rectify that issue.
	The noble Baroness asked where this leaves the well-being power. In the Local Government Act 2000 the power of well-being was introduced which allows councils to do anything with the exception of raising money or things expressly prohibited by legislation that would have an impact on the social, economic and environmental well-being of their area. The breadth of this power is such that it can be regarded as a power of first resort when seeking to improve such outcomes for communities, but we recognise that many local authorities will be concerned about the implications of the LAML case. However, every court case on the well-being power has upheld the breadth of that power, and this one is no different. The court case ruled mutual insurance services out of scope of the well-being power and changing the well-being power or introducing another form of general power would not be certain to ensure that local authorities could engage in mutual insurance arrangements. I know that that debate will go on, but before us tonight are these amendments relating to mutual insurance. I am grateful to have the support of both noble Lords.
	Motion agreed.
	Motion on Amendments 4 to 6
	 Moved by Lord McKenzie of Luton
	That this House do agree with the Commons in their Amendments 4 to 6.

Lord McKenzie of Luton: I shall speak also to Amendment 9. Amendment 4 addresses the Secretary of State's power to disapply the operation of Part 2 of the Housing Grants, Construction and Regeneration Act 1996 from types of construction contract. While the Bill has been going through Parliament, we have been approached by a number of stakeholders from within the industry and also its customers who are concerned about the nature of the Secretary of State's power to exclude contracts from the provisions of the 1996 Act.
	Currently the 1996 Act contains an "all or nothing" power so that the Secretary of State can disapply all the provisions of Part 2 of the 1996 Act from types of contract. We would like to substitute a new power enabling the Secretary of State to disapply any, not necessarily all, of the provisions of Part 2 of the 1996 Act. The current power in the 1996 Act is a blunt one. Amendment 4 will allow the Secretary of State to exercise the disapplication power in a proportionate manner.
	This approach will give us the flexibility to deal with specific issues of direct concern with particular types of contract. Importantly, it will allow us to ensure that as many of the valuable features of the 1996 Act as amended by this Bill continue to apply—for instance, the right to stage payments, the right to adjudication and the right to suspend performance in cases of non-payment as appropriate. The legislation will also be able to respond proportionately to future contractual innovations. The current order-making power is subject to the affirmative procedure, and that will be the case with the new power.
	The next amendments in this group are Commons Amendments 5 and 6, which are minor amendments to Clause 137, concerning pre-dispute agreements regarding adjudication costs. The 1996 Act was silent on the costs of adjudication and this has led to a practice in the industry whereby the party with the most bargaining power can insert a clause into the construction contract requiring that if the weaker party wants to go to adjudication to determine a dispute, they would have to pay all the superior party's legal and other costs, and all the fees and expenses of the adjudicator. Clearly, such practices are unacceptable and are directly intended to work against the intent of the 1996 Act.
	Clause 137 therefore inserts new Section 108A into the 1996 Act, and this prevents parties to construction contracts from entering into agreements before a dispute has arisen as to who should pick up the costs of an adjudication. A consequence of this broad and simple prohibition is that pre-dispute agreements between the parties to the effect that an adjudicator can allocate his fees and expenses as part of his decision are also caught. Allowing the parties to agree in their construction contract that the adjudicator has this power is current good practice, which we would like to preserve. This amendment achieves this by carving out such agreements from the general prohibition. This is wholly in line with the amendment suggested by my noble friend Lord Brett during report on 22 April. I beg to move.

Lord Bates: My Lords, as was said in the other place when this was debated, we strongly support this clause and the amendments which have been put forward. They are essential protection, particularly for the sub-contractors, who are often the people we read about in our newspapers day after day, going out of business as a result of funds not being passed on to them at an appropriate speed by main contractors. Anything that can be done to strengthen their position will be welcome, and this certainly does that.
	We also support the strengthening of the adjudication system, and I echo the comments made by my honourable friend Stewart Jackson in another place. He said that this area was so complex and detailed that perhaps it merited a stand-alone construction Bill in order to deal with all that. I think, however—trying to be charitable—that we are quickly running out of time in this Session, so there is not likely to be such a Bill soon. But a specific Bill focused on construction, to draw in all of the areas in which they operate, particularly in relation to requirements on credit insurance, would be widely welcomed. Even in their present form, the new provisions are a significant step forward, and will provide welcome relief when implemented to many essential small and medium-sized businesses up and down the country.

Baroness Hamwee: My Lords, this part of the Bill seems to attract a lot of comments, not necessarily consistent with one another. It seems to us that the Government have managed, at any rate, to satisfy one area of concern which was expressed to us during the earlier stages of the Bill, so we support the amendments.

Lord McKenzie of Luton: My Lords, I am grateful to both noble Lords for supporting these provisions.
	Motion agreed.
	Motion on Amendment 7
	 Moved by Lord McKenzie of Luton
	That the House do agree with the Commons in their Amendment 7.

Lord McKenzie of Luton: My Lords, I spoke to this amendment with Amendment 2.
	Motion agreed.
	Motion on Amendment 8
	 Moved by Lord McKenzie of Luton
	That the House do agree with the Commons in their Amendment 8.

Lord McKenzie of Luton: My Lords, this is the privilege amendment.
	Motion agreed.
	Motion on Amendments 9 and 10
	 Moved by Lord McKenzie of Luton
	That the House do agree with the Commons in their Amendments 9 and 10.

Lord McKenzie of Luton: My Lords, I spoke to these amendments with earlier amendments.
	Motion agreed.

House adjourned at 8.51 pm.